UNIVERSITY  OF  CALIFORNIA 
AT  LOS  ANGELES 


.J 


WORKMEN'S  COMPENSATION 


THE  MACMILLAN  COMPANY 

HEW  YORK  •   BOSTON  •   CHICAGO  •  DALLAS 
ATLANTA  •    SAN  FRANCISCO 

MACMILLAN  &  CO.,  Limited 

LONDON  •  BOMBAY  •  CALCUTTA 
MELBOURNE 

THE  MACMILLAN  CO.  OF  CANADA,  Ltr. 

TORONTO 


WORKMEN'S 
COMPENSATION 


BY 

J.  E.   RHODES,  2d 


Npw  fork 
THE  MACMILLAN  COMPANY 

1917 

All  rights  reserved 


COPYEIQHT,    1917, 

By  the  MACMILLAN  COMPANY 


Published,   June,   1917. 


;>  :';  ^'' 


0 


^K, 


I  'i  I  CD 


DEDICATED 
TO 

WALTER  GOODMAN  COWLES 

PROFOUND  STUDENT 

AND 

PRACTICAL  ADMINISTRATOR 

OF  THE  PROBLEMS 

OF 

WORKMEN'S  COMPENSATION 


20815:1, 


FOREWORD 

This  book  has  been  written  in  the  attempt  to  give  a  brief 
history  of  the  Workmen's  Compensation  movement  in  this 
country,  and  an  outline  of  the  principles  on  which  the  system 
is  based.  Certain  limitations  must  be  recognised  in  a  work 
of  this  nature,  when  it  is  confined  within  any  reasonable  size, 
and  so  little  or  no  attempt  has  been  made  to  go  into  the  de- 
tails of  the  compensation  movement,  and  as  the  position  taken 
in  the  book  is  that  the  problem  is  one  which  is  national  in  its 
scope,  but  local  in  its  solution  because  of  constitutional  re- 
strictions, the  problem  is  considered  in  its  national  rather 
than  in  its  local  aspects.  It  is  possible  that  a  more  logical 
method  of  treatment  might  demand  a  detailed  consideration 
of  the  problem  as  it  has  been  worked  out  in  each  individual 
state,  but  this  method  would  have  necessitated  too  much  of  a 
deviation  from  the  position  taken  that  the  problem  is  national 
rather  than  local,  and  so  this  phase  of  the  problem  has  been 
emphasised  at  the  possible  expense  of  logical  arrangement. 

A  superficial  consideration  of  the  Workmen's  Compensa- 
tion problem  as  it  has  been  worked  out  in  this  country  may 
serve  to  emphasise  the  differences  in  the  details  of  the  laws 
of  the  different  states,  but  a  deeper  study  of  the  problem  shows 
that  although  the  laws  vary  in  detail  there  are  certain  general 
and  fundamental  principles  upon  which  all  are  based,  and  the 
attempt  has  been  made  to  outline  and  emphasise  those  princi- 
ples in  this  book.  Further  than  that  it  cannot  go,  but  copious 
references  to  the  literature  of  this  movement  are  given  so 
that  the  student  of  the  subject  who  desires  to  make  a  deeper 


rOEEWORD 

study  has  the  references  given  him  for  that  study.  It  is 
hoped,  therefore,  that  the  book  may  be  of  value  to  two  classes 
of  readers.  To  the  student  who  desires  a  general  knowledge 
of  the  subject  it  offers  an  outline  of  the  history  and  principles 
of  Workmen's  Compensation ;  to  the  student  who  may  desire 
a  deeper  knowledge  it  will  serve  as  a  guide  for  further  study. 

J.  E.  Rhodes,  2d. 
Hartford,  Conn.,  April,  1917. 


CONTENTS 

CHAPTER  PAGE 

I  Introductory  Survey      1 

II  Industrial  Accidents  and  Accident  Insurance  21 

III  European   Background 41 

IV  The  Agitation  in  the  United  States   ...  63 

V  Early  Attempts  in  the  United  States  ...  85 

VI     The  Constitutionality  of  Compensation  Legis- 
lation        10"^ 

VII     Compensation  Legislation  in  the  United  States  129 

VIII     The  Insurance  of  the  Compensation  Obligation  157 

IX    The    Administration    of    Compensation    Laws  180 

X     Some  Social  Aspects  of  Workmen's  Compensa- 
tion      203 

APPENDIX 

A     The    Workmen's    Compensation    Movement   in 

New   York 336 

B     Standards  for  Workmen's  Compensation  Laws  238 

C    Digest  of  Workmen's  Compensation  Laws  .     .  350 

Bibliography 278 

Table  of  Cases  Cited 389 

Index 391 


WORKMEN'S  COMPENSATION 


WORKMEN'S 
COMPENSATION 

CHAPTER  I 

INTE.ODUCTORY    SURVEY 

The  first  general  workmen's  compensation  law  to  stand 
the  test  of  constitutionality  and  become  operative  in  the 
United  States  was  the  New  Jersey  law,  which  was  approved 
April  4,  1911  and  became  effective  July  4,  1911.^  It  was 
predicted  that  the  extension  of  the  compensation  principle, 
when  the  difficulties  which  were  supposed  to  stand  in  the 
way  of  the  enactment  of  any  such  legislation  that  would 
stand  the  test  of  constitutionality  were  once  surmounted, 
would  be  rapid,  and  this  prediction  has  been  fulfilled,  for 
the  change  from  the  common  law  system  of  employers' 
liability  to  the  system  of  employers'  liability  recognised  by 

1  The  Act  of  Congress  of  May  30,  1908,  which  took  effect  on  August 
1,  1908,  extended  the  compensation  principle  to  certain  classes  of  gov- 
ernment employees,  but  this  act  is  so  limited  in  its  scope  and  applica- 
tion that  it  can  hardly  be  considered  a  scientific  compensation  law. 
Chapter  236,  Acts  of  1901-8.  For  an  account  of  the  administration 
of  this  law  see  the  volume  of  Opinions  of  the  Solicitor,  Department 
of  Labor,  Workmen's  Compensation,  Washington,  1915.  Other  laws 
were  passed  in  different  states  prior  to  1911  which  attempted  to  put 
the  compensation  principle  into  operation  under  certain  limitations, 
but  these  laws  either  were  declared  unconstitutional  or  became  inop- 
erative by  disuse,  so  that  the  New  Jersey  law  stands  forth  as  the  first 
constitutional  compensation  law  to  become  effective  in  the  United  States. 

1 


2  WOEKMEN'S  COMPENSATION 

workmen's  compensation  legislation  is  the  most  remarkable 
transition  of  its  kind  in  the  history  of  the  United  States. 
While  the  actual  change  from  the  common  law  system  to  the 
compensation  system  by  legislative  action,  for  this  is  the 
only  way  in  which  it  could  be  legally  accomplished,  was  sud- 
den, it  must  not  be  assumed  that  the  movement  in  itself  was 
sudden  or  impetuous,  nor  was  the  agitation  confined  to  any 
one  part  of  the  civilised  world,  for  it  w^as  a  legal  change 
necessitated  by  previous  economic  and  social  changes,  and  the 
agitation  which  resulted  in  the  transition  was  a  world  move- 
ment. 

The  compensation  movement  must,  therefore,  be  considered 
in  its  historical  aspect  in  order  to  obtain  the  proper  per- 
spective of  the  compensation  principle,  and  while  this  study 
of  the  principle  is  confined  particularly  to  its  history  and 
operation  in  the  United  States  it  is  practically  impossible 
to  separate  the  history  of  the  movement  in  any  one  locality 
from  that  of  other  localities,  and  as  the  United  States  was 
the  last  of  the  civilised  nations  to  adopt  the  principle  its 
history  and  development  in  the  other  nations  must  be  under- 
stood before  we  can  have  any  background  for  the  study  of 
the  movement  in  the  United  States.  The  compensation  prin- 
ciple had  been  generally  adopted  as  a  part  of  the  jurispru- 
dence of  the  different  European  nations  prior  to  the  close 
of  the  nineteenth  century,  but  as  far  as  the  United  States 
was  concerned  this  problem  was  one  of  the  social  and  politi- 
cal legacies  left  to  the  twentieth  century  by  its  predecessor 
for  solution. 

While  it  may  be  interesting  to  note  the  result  of  the 
agitation  in  practically  all  of  the  European  nations,  it  is 
particularly  valuable,  and  necessary,  in  fact,  to  have  a  gen- 
eral understanding  of  the  subject  in  Germany  and  Great 
Britain  as  a  basis  for  the  study  of  this  problem  in  the  United 


INTRODUCTORY  SURVEY  3 

States,  but  before  giving  any  description  of  the  compensation 
systems  of  any  of  the  European  nations  it  is  necessary  to 
take  a  casual  survey  of  the  different  economic  and  social 
changes  which  necessitated  the  repudiation  of  the  common 
law  system  and  the  adoption  of  the  compensation  system. 
It  has  become  a  matter  of  usage  to  apply  the  term  "Em- 
ployers' Liability"  to  the  common  law  system  and  the  term 
"Workmen's  Compensation"  to  the  compensation  system,  but 
strictly  speaking  this  is  an  inaccuracy  and  should  be  cor- 
rected in  the  beginning,  for  both  the  common  law  system  and 
its  statutory  successor,  the  compensation  system,  are  parts  of 
the  general  legal  system  of  employers'  liability,  and  for  the 
sake  of  legal  accuracy  the  use  of  the  term  "Employers'  Liabil- 
ity" should  be  discontinued  when  referring  to  a  part  of  the 
system  and  should  be  used  only  in  its  general  and  proper 
meaning.  The  terms  used  here,  therefore,  will  be  "the  com- 
mon law  system"  and  "the  compensation  system." 

The  general  subject  of  employers'  liability  deals  with  the 
right  of  an  employee  to  recover  damages  from  his  employer 
for  injuries  sustained  while  in  the  course  of  his  employment 
and  alleged  to  have  arisen  out  of  it.  The  law  of  employers' 
liability,  as  a  part  of  the  more  comprehensive  subject  of 
Master  and  Servant,  is  a  development  of  the  nineteenth 
century,  and  particularly  of  the  latter  half  of  that  century, 
and  we  must  now  consider  specially  the  development  of  the 
law  in  Great  Britain  and  the  United  States,  for  we  are 
particularly  concerned  with  the  transition  from  the  common 
law  system  to  the  compensation  system  in  those  two  coun- 
tries. 

The  essential  difference  between  these  two  systems  is  that 
under  the  common  law  system  the  injured  employee  cannot 
recover  damages  from  the  employer  imless  he  can  show  that 
his  injuries  were  received  under  circumstances  which  impose 


4  WORKMEN'S  COMPENSATION 

a  legal  responsibility  on  the  employer,  while  under  the  com- 
pensation system  the  theory  is  recognised  that  industry  should 
bear  at  least  a  proportional  sliare  of  the  financial  losses 
caused  by  industrial  accidents.  This  general  statement  as 
to  the  compensation  principle  is  subject  to  certain  qualifica- 
tions which  cannot  be  considered  here  but  will  be  noted  later. 
As  law  is  essentially  a  conservative  force,  and  changes  in 
established  and  recognised  legal  doctrines  are  usually  neces- 
sitated by  economic  and  social  changes  which  have  already 
taken  place  so  the  repudiation  of  the  common  law  system 
of  employers'  liability  and  the  adoption  of  the  compensation 
system  was  necessitated  by  the  evolution  in  industrial  life 
during  the  nineteenth  century,  and  the  transition  of  the 
relation  of  master  and  servant  to  that  of  employer  and  em- 
ployee. 

The  essential  fact  and  the  controlling  factor  in  this  in- 
dustrial revolution  was  the  change  from  hand  labour,  or  hand 
labour  in  connection  with  simple  tools  and  machinery,  to 
power-driven  machinery,  and  the  changes  which  necessarily 
came  as  a  result  of  this  transition.  The  different  factors 
which  contributed  in  eifecting  the  transition  will  be  men- 
tioned but  briefly,  for  it  is  with  the  results  rather  than  the 
causes  that  we  are  particularly  concerned,  but  brief  mention 
must  be  made  of  the  causes  which  effected  these  results.  The 
underlying  factor  in  the  change  was  the  development  of  a 
new  form  of  motive  power,  steam,  and  concurrent  with  the 
development  of  the  steam-engine  the  invention  of  a  number 
of  mechanical  devices  which  superseded  hand  labour  in  man- 
ufacturing processes.  This  transition  centered  around  the 
textile  industries,  and  it  is  in  its  connection  with  those  in- 
dustries that  it  will  be  particularly  considered. 

The  change  started  during  the  latter  half  of  the  eighteenth 
century  and  was  fully  consummated  during  the  nineteenth 


INTRODUCTORY  SURVEY  5 

century,  aiid  as  the  stages  of  human  history  are  known  it 
is  termed  the  transition  from  the  handicraft  stage  to  the  in- 
dustrial stage.  The  disting-uishing  feature  of  the  former 
stage  is  that  in  it  the  production  of  supplies  for  human 
wants  was  conducted  by  hand,  or  by  hand  assisted  by  simple 
machinery,  while  in  the  latter  stage  the  manufacture  had 
passed  from  the  simple  methods  in  use  in  the  former  stage 
to  the  complex  methods  which  followed  the  substitution  of 
machine  labour  for  hand  labour.  During  the  handicraft 
stage  the  simple  manufacturing  operations  were  conducted 
in  the  home,  by  the  master  of  the  house  assisted  by  his  family, 
or  by  a  single  helper  or  a  few  helpers,  or  if  the  operations 
were  conducted  apart  from  the  home  it  was  under  simple 
conditions  where  a  few  servants  worked  together  with  a  com- 
mon master  for  a  common  end.  The  relations  of  the  master 
and  the  servant  were  close  and  personal,  and  their  interests 
were  identical.  In  the  industrial  stage  the  factory  was  sub- 
stituted for  the  home  or  the  small  shop,  the  machine  for  the 
hand  tools,  the  impersonal  corporation  for  the  personal  mas- 
ter, and  the  simple  relation  of  master  and  servant  passed 
to  the  complex  relation  of  employer  and  employee. 

The  inventions  which  particularly  affected  the  textile  in- 
dustries were  the  cotton  gin,  the  spinning- jenny,  the  "mule," 
and  the  power  loom,  and  all  of  these  inventions  came  within 
a  period  of  less  than  thirty  years,  from  lIQi  to  1792.  Al- 
though the  cotton  gin  was  the  last  in  the  series  it  is  mentioned 
first,  because  it  is  the  first  machine  used  in  the  manufacture 
of  cotton  and  it  was  fundamental  to  the  usefulness  and  de- 
velopment of  the  other  machinery.  It  was  the  only  one 
of  these  great  inventions  which  was  invented  in  the  United 
States;  all  of  the  others  were  invented  in  England.  With 
the  perfection  and  adoption  of  these  different  mechanical 
devices  the  old  order  passed  and  a  new  order  came  into  being. 


6  WORKMEN'S  COMPlENSATION 

The  handicriift  stage  passed  into  the  industrial  stage.  The 
home  or  the  small  shop  could  not  accommodate  the  new 
machinery,  so  the  factory  became  a  necessity.  The  individ- 
ual did  not  possess  the  necessary  capital  to  own  and  operate 
the  machines  which  were  essential  for  the  different  processes, 
so  several  individuals  combined  to  become  employers,  the 
partnership  developed  on  a  scale  hitherto  unknown,  and  the 
corporation,  which  possesses  the  fiction  of  a  legal  entity  apart 
from  the  existence  of  the  individuals  which  compose  it,  was 
adapted  to  the  necessities  of  industrial  life  when  the  inap- 
plicability of  the  partnership)  to  the  new  industrial  order  was 
shown. 

The  effect  of  this  transition  on  the  workman  was,  in  brief, 
that  the  working-place  was  transferred  from  the  home  or  the 
small  shop  to  the  large  factory.  It  became  necessary  for 
him  to  live  near  the  place  where  he  was  working,  so  large 
settlements  grew  up  around  the  factory,  and  if  several 
factories  were  located  in  close  proximity  a  city  gTew  up  in 
that  locality.  Thus  the  conditions  of  living  passed  from 
country  life  to  city  life,  and  as  these  factory  cities  were  of 
sudden  growth  little  attention  was  paid  to  sanitation  or  proper 
livino;  conditions  until  the  necessitv  of  such  attention  had 
been  shown  by  sad  experience  to  an  awakened  public  con- 
science. The  relation  of  master  and  servant  during  the 
handicraft  stage  had  been  essentially  a  personal  relation,  but 
with  the  transition  this  relation  is  more  properly  designated 
as  that  of  employer  and  employee,  because  the  personal  ele- 
ment was  gradually  eliminated  as  manufacturing  operations 
became  larger  and  the  identity  of  the  individual  was  merged 
in  that  of  the  mass.  Thus  the  lines  of  class  distinction 
became  clearly  and  sharply  drawn  between  the  capitalistic 
class  and  the  labouring  class. 

The  political  tendencies,  in  the  meantime,  had  been  towards 


INTRODUCTOKY  SURVEY  7 

the  enlargement  of  the  political  and  civil  rights  of  the  in- 
dividual, so  we  have  the  paradox  that  while  the  individual 
was  gaining  his  political  rights  his  social  condition  was  be- 
coming one  of  economic  ser^dtude.  The  whole  spirit  of 
theoretical  economics  as  the  science  was  developed  in  Eng- 
land and  in  English-speaking  countries  was  based  on  the 
political  and  consequent  social  independence  of  the  individ- 
ual, while  the  practical  economic  and  industrial  development 
was  tending  to  deprive  him  of  the  very  freedom  which  eco- 
nomic and  political  theory  was  extending  to  him.  The  recog- 
nition of  this  fact  is  fundamental  to  the  study  of  compensa- 
tion, for  the  very  basis  of  the  compensation  system  is  a  legal 
recognition  of  the  practical  economic  condition  and  a  repudi- 
ation of  the  individualistic  theory  upon  which  the  common 
law  system  of  employers'  liability  is  based. 

One  of  the  unfortunate  incidents  of  this  industrial  revo- 
lution, and  one  which  increased  both  in  volume  and  in  the 
severity  of  its  eifects  as  time  passed  and  industrial  operations 
became  more  intense,  was  the  'industrial  accident."  This 
term  is  used  particularly  to  ajDply  to  accidents  which  happen 
to  workmen  during  the  course  of  their  employment  and  arise 
from  the  operations  which  are  incident  to  the  employment. 
This  was  a  negligible  factor  if  it  was  present  at  all  during 
the  handicraft  stage,  for  under  the  simple  industrial  con- 
ditions of  that  time  none  of  the  causes  which  gave  rise  to 
the  industrial  accident  of  the  industrial  stage  were  present, 
and  the  few  accidents  which  may  have  happened  to  the  ser- 
vant while  he  was  engaged  in  his  work  were  of  a  minor 
nature.  Therefore  no  attempts  were  made  by  servants  to 
recover  damages  from  their  masters  for  the  effects  of  any 
such  accidents,  so  the  law  of  employers'  liability  is  one  of 
the  legal  developments  of  the  industrial  stage. 

The  right  of  a  servant  to  recover  against  his  master,  or  of 


8  WOKKMEN'S  COMPENSATION 

an  employee  to  recover  against  his  employer,  for  injuries 
sustained  during  the  course  of  his  employment  comes  within 
the  domain  of  the  law  of  negligence^  and  while  the  right  is  de- 
termined on  the  general  principles  of  negligence  still  there 
are  certain  rules  which  are  recognised  in  employers'  liability 
cases  which  are  not  present  when  the  relation  of  employer  and 
employee  does  not  exist.  The  effect  of  the  recognition  of 
these  principles  with  the  strictness  prescribed  by  the  com- 
mon law,  has  resulted  in  hardship  to  the  employee,  and  the 
result  of  their  application  has  been,  in  brief,  that  at  first  dif- 
ferent legislative  modifications  were  made  to  mitigate  the  po- 
sition of  the  employee,  and  as  these  modifications  have  failed 
to  accomplish  the  full  effect  desired  the  common  law  system 
has  been  repudiated  and  the  compensation  system  established. 
It  is  necessary  to  review  briefly  the  common  law  rules  of 
employers'  liability  in  order  that  we  may  have  the  proper 
basis  for  the  study  of  the  compensation  system,  for  as  the 
compensation  system  was  necessitated  by  the  shortcomings 
of  the  common  law  system  we  cannot  understand  why  the 
change  was  necessary  unless  we  possess  a  general  knowledge 
of  the  principles  of  the  common  law  system,  so  that  we  can 
see  wherein  it  failed  to  adapt  itself,  and  how  it  was  in  fact 
incapable  of  adaptation,  to  the  changed  conditions  of  indus- 
trial life.  It  has  already  been  noted  that  law  is  a  conserva- 
tive force,  and  as  the  law  cannot  anticipate  economic  and  so- 
cial changes  legal  changes  follow  in  the  wake  of  evolution  and 
transformation  in  economic  and  social  life.  The  result  is, 
therefore,  that  existing  rules  of  law  and  existing  legal  insti- 
tutions are  often  perpetuated  long  after  their  applicability 
has  ended,  and  that  legal  changes  which  have  long  been 
necessary  are  made  only  after  the  necessity  for  change  has 
been  so  clearly  shown  that  the  existing  rules  can  no  longer 
be  endured.     A  comprehensive  understanding  of  this  prin- 


INTRODUCTOKY  SURVEY  9 

ciple  is  necessary  iu  the  study  of  workmen's  compensation, 
for  while  all  unprejudiced  students  of  the  subject  had  long 
admitted  the  shortcomings  of  the  common  law  system  of  em- 
ployers' liability,  the  transition  to  the  compensation  system 
was  delayed  by  the  natural  conservatism  of  the  law  until  long 
after  the  necessity  for  the  change  had  been  undebatably 
demonstrated  by  practical  experience.  This  is  particularly 
true  in  the  United  States,  and  the  reasons  why  the  change 
was  delayed  will  be  shown  as  we  proceed. 

The  common  law  consists  of  certain  general  principles  of 
right  and  justice  which  are  recognised  by  the  courts  as  con- 
trolling in  controversies  between  parties,  and  these  rules  do 
not  depend  for  their  force  on  any  statutory  enactments  but 
simply  on  general  recognition.^     The  common  law  rules  of 

1  The  words  of  Chancellor  Kent  in  describing  the  nature  and  source 
of  the  common  law  are  so  apt  and  appropriate  that  I  am  quoting  him 
briefly,   as  follows: 

"The  common  law  includes  those  principles,  usages  and  rules  of 
action  applicable  to  the  government  and  security  of  persons  and  prop- 
erty, Avhich  do  not  rest  for  their  authority  upon  any  express  and 
positive  declaration  of  the  will  of  the  legislature. 

"A  great  proportion  of  the  rules  and  maxims  which  constitute 
the  immense  code  of  the  common  law  grew  into  use  by  gradual  adoption, 
and  received,  from  time  to  time,  the  sanction  of  the  courts  of  justice, 
without  any  legislative  act  or  interference.  It  was  the  application 
of  the  dictates  of  natural  and  of  cultivated  reason  to  particular  cases. 

"The  reports  of  judicial  decisions  contain  the  most  certain  evidence, 
and  the  most  authoritative  and  precise  application  of  the  rules  of  the 
common  law.  Adjudged  cases  become  precedents  for  future  cases 
resting  upon  analogous  facts,  and  brought  within  the  same  reason;  and 
the  diligence  of  counsel,  and  the  labor  of  judges  are  constantly  required, 
in  the  study  of  the  reports,  in  order  to  understand  accurately  their 
import,  and  the  principles  they  establish."  Kent's  Commentaries,  Lec- 
ture XXI. 

For  some  judicial  observations  on  the  expansive  character  of  the 
common  law,  and  its  theoretical  fitness  to  adapt  itself  to  all  conditions, 
see  the  opinion  of  Chief  Justice  Shaw  in  the  case  of  Tslorway  Plains  Co. 
V.  Boston  d  Maine  R.  R.  Co.,  1  Gray,  263.     The  failure  of  this  theory 


10  WOEKMEN'S  COMPENSATION 

employers'  liability,  as  one  phase  of  the  law  of  Master  and 
Servant,  are  an  outgrowth  of  the  law  of  Master  and  Servant 
which  was  recognised  at  the  beginning  of  the  industrial  stage. 
While  it  is  the  theory  of  the  common  law  that  it  is  expansive 
enough  to  adapt  itself  to  changed  conditions,  this  theory 
has  failed  to  w^ork  out  in  practice,  and  its  failure  has  been 
no  more  apparent  in  any  branch  of  the  law  than  it  has  in  its 
application  to  the  law  of  employers'  liability.  The  attempts 
to  remedy  the  defects  of  specific  rules  of  the  common  law 
system  of  employers'  liability  by  statute  have  been  such 
conspicuous  failures  that  a  repudiation  of  the  basis  of  the 
system  was  necessary,  and  this  repudiation  was  effected  by 
the  adoption  of  the  compensation  system,  which  eliminates 
the  idea  of  legal  fault  on  the  part  of  the  employer  as  a  basis 
of  recovery. 

The  common  law  rules  of  Master  and  Servant  prior  to  the 
industrial  stage  centre  aroimd  two  principles,  the  liability 
of  a  master  to  third  parties  for  the  torts  of  his  servant  com- 
mitted during  the  course  of  his  employment,  and  the  rights 
of  the  master  against  third  parties  for  interference  with  the 
employment.  The  common  law  rules  of  this  time  which  were 
applicable  to  the  relation  of  master  and  sen^ant  were  based 
on  principles  that  became  established  when  the  status  of  the 
servant  was  little  better  than  that  of  a  slave.  The  master 
could  be  held  liable  by  third  parties  for  injuries  done  to  them 
by  reason  of  the  negligence  of  his  servant  while  engaged  in 
the  work  of  the  master,  but  it  was  held  that  this  negligence 
must  arise  from  some  act  in  connection  with  the  master's 
work  before  liability  could  be  imposed  on  the  master.  He 
could  not  be  held  liable  for  the  negligence  of  the  servant  in 
matters  outside  the  scope  of  his  employment.     On  the  other 

to  work  out  in   practice  cannot  be  too  strongly  emphasised,   for   it  is 
the  basis  of  all  of  the  statutory  modifications  of  common  law  rules. 


INTKODUCTORY  SURVEY  11 

hand  the  master  might  aid  his  servant  in  enforcing  a  right 
against  a  stranger  without  being  guilty  of  maintenance.  Pie 
coukl  bring  an  action  against  any  man  for  beating  or  maim- 
ing his  servant  if  loss  of  service  could  be  showm,  and  he  could 
justify  an  assault  in  defence  of  his  servant.  He  also  had  an 
action  for  damages  against  any  person  enticing  his  servant 
away  from  him.^ 

The  industrial  accident  of  the  industrial  stage  gave  rise 
to  a  new  phase  in  the  law  of  Master  and  Servant,  and  it  is 
the  factor  which  was  responsible  for  the  development  of  the 
rules  of  employers'  liability.  This  phase  of  the  law  of  Mas- 
ter and  Servant,  as  has  already  been  stated,  deals  with  the 
right  of  an  injured  employee  to  recover  damages  from  his 
employer  for  injuries  sustained  during  the  course  of  his  em- 
plo\Tiient  and  alleged  to  have  arisen  out  of  it.  The  right 
is  based  on  the  general  principle  of  the  law  of  N'egligence 
that  one  who  is  injured  by  the  fault  of  another  has  a  right 
to  recover  damages  from  the  wrongdoer  for  the  injuries  sus- 
tained. To  apply  this  principle  to  the  relation  of  employer 
and  employee  the  general  statement  of  the  law  is  that  if  an 
injured  employee  can  show  that  his  injury  was  caused  by  fault 
on  the  part  of  the  employer  he  can  recover  damages  from  the 
employer,  but  if  the  employer  was  in  no  way  in  fault  no 
recovery  against  him  can  be  had. 

This  idea  of  the  fault  of  the  employer  as  a  basis  of  re- 
covery under  the  common  law  system  is  fundamental,  and 
it  is  also  fundamental  to  understand  that  in  contemplation 
of  law  the  position  of  the  employer  and  employee  was  one 
of  equality.  The  only  way  in  which  an  injured  employee 
could  enforce  his  right  against  his  employer  was  through 
the  courts,  and  so  if  the  employer  refused  to  recognise  the 

1  For  a  summary  of  the  early  law  of  Master  and  Servant  see  Chapter 
XIV,  Volume  1,  Blackstone's  Commentaries, 


12  WORKMEN'S  COMPENSATION 

claim  of  his  employee  the  only  course  open  to  the  employee, 
if  he  desired  to  proceed  with  his  claim,  was  to  resort  to  the 
courts  and  if  he  was  unable  to  establish  his  claim  for  damages 
in  the  courts  no  damages  could  be  recovered.  In  theory 
the  rights  of  both  the  employer  and  employee  before  the  law 
are  equal,  but  it  was  this  very  theoretical  equality  that  gave 
rise  to  many  of  the  hardships  of  an  injured  employee  under 
the  common  law  system. 

As  employers'  liability  cases  were  decided  by  the  courts  in 
actual  litigation  the  duties  of  the  employer  to  his  employee 
became  crystalised  in  a  few  general  principles  which  are  sim- 
ple enough  in  their  statement  and  too  often  correspondingly 
indefinite  in  their  application.  All  of  these  principles  centre 
around  the  obligation  of  the  employer  to  furnish  his  employee 
with  safe  M^orking  conditions  and  are  ramifications  of  that  ob- 
ligation, but  as  that  statement  of  the  obligation  is  too  general 
and  indefinite  it  may  be  said  that  the  employer  owes  it  to  his 
employee,  at  common  law,  to  provide  him  with  a  safe  place 
within  which  to  do  his  work,  to  furnish  safe  and  suitable 
tools  with  which  to  do  the  work,  to  surround  him  with  rea- 
sonabl}'^  safe  and  competent  fellow-servants,  and  to  give  him 
the  necessary  instructions  as  to  how  the  work  should  be  done. 
Unless  the  employee  can  show  a  violation  of  some  one  or  more 
of  these  obligations  he  can  recover  no  damages  from  his  em- 
ployer for  injuries  sustained  during  the  course  of  his  employ- 
ment, and  the  only  finality  as  to  the  employee's  right  to  re- 
cover in  cases  where  the  employer  contests  his  right  is  the 
decision  of  a  court  of  last  resort. 

The  defence  of  the  employer  in  employers'  liability  cases 
centres  around  three  particular  defences,  any  one  of  which 
if  established  is  sufiicient  to  defeat  recovery.  These  are  the 
defence  of  contributory  negligence,  that  of  assumption  of 
risk,  and  the  fellow-servant  rule.     Only  brief  mention  will 


INTKODUCTORY  SURVEY  13 

be  made  of  these  defences,  for  the  general  basis  of  each  de- 
fence can  be  readily  understood  from  its  name.  The  con- 
tributory negligence  rule  is  that  if  an  injury  is  caused  by  the 
negligence  of  the  injured  employee  himself  he  cannot  re- 
cover from  his  employer;  that  of  assumption  of  risk  is  that 
if  an  injury  is  caused  by  a  danger  inherent  in  the  occupation, 
and  against  which  the  employee  is,  in  theory,  as  well  able 
to  protect  himself  as  the  employer  can  protect  him,  there 
can  be  no  recovery  from  the  employer;  the  fellow-servant 
rule  is  that  if  an  injury  is  caused  by  the  negligence  of  a 
co-employee  the  employer  is  not  liable.  These  general  state- 
ments as  to  the  defences  named  are  all  subject  to  certain 
qualifications,  but  this  is  an  outline  of  the  principles  on  which 
they  are  based.  ^ 

The  bill  of  particulars  in'  the  indictment  against  the  com- 
mon law  system  of  employers'  liability  can  be  summarised 
under  four  general  headings.  These  may  be  defined  as  the 
uncertainty  as  to  the  basis  of  a  claim  for  damages  under  the 
common  law,  the  delay  incident  to  the  enforcement  of  a 
claim  in  the  courts,  the  uncertainty  as  to  the  amount  of 
damages  Avhich  may  be  awarded,  and  the  uncertainty  as  to 
the  collection  of  a  judgment  after  one  has  been  obtained 
and  sustained.  It  is  the  object  of  the  compensation  system 
to  eliminate  each  one  of  these  defects  as  far  as  possible,  and 
as  the  principles  of  compensation  are  discussed  with  some 
detail  it  will  be  shown  how  this  system  has  proceeded  to 

1  It  is  of  particular  importance  that  the  general  principles  of  these 
defences  should  be  understood,  not  only  because  of  the  fact  that  their 
application  in  the  common  law  system  of  employers'  liability  to  our 
complex  industrial  operations  was  one  of  the  principal  factors  in  dis- 
closing the  defects  of  the  system,  but  also  because  of  the  part  that  they 
have  played  in  eliminating  some  of  the  constitutional  obstacles  which 
have  prevented  the  enactment  of  compulsory  compensation  laws  in  the 
United  States,  and  have  compelled  the  enactment  of  elective  laws. 


14  WORKMEN'S  COMPENSATION 

eliminate  the  defects  named.  As  a  fitting  close  to  this 
chapter  each  of  these  defects  of  the  common  law  system  will 
be  briefly  considered. 

As  the  terms  in  which  the  common  law  defines  the  obliga- 
tion of  an  employer  to  his  employee  are  very  general  in  their 
nature,  the  iudefiniteness  of  the  obligation  often  gives  rise 
to  a  donbt  as  to  whether  or  not  the  employer  has  violated 
any  of  his  legal  duties  when  an  injured  employee  makes  a 
claim  against  him  for  damages,  and  when  a  violation  of  the 
obliaatiou  is  alleged  bv  the  employee  and  denied  by  the  era- 
ployer  the  only  course  open  to  the  employee  is  either  to 
abandon  his  claim  or  submit  it  to  the  court  for  adjudication. 
The  court  consists  of  two  elements,  the  judge  and  the  jury, 
the  distinctive  fimction  of  the  judge  being  to  pass  on  questions 
of  law  and  that  of  the  jury  to  pass  on  questions  of  fact.  As 
any  case  may  involve  questions  both  of  law  and  of  fact  it  is 
necessary  for  a  litigant  first  to  establish  the  legal  basis  of 
his  claim  and  then  to  produce  the  facts  with  which  to  sub- 
stantiate the  claim.  The  element  of  uncertainty  on  the  part 
of  the  claimant  as  to  his  ability  to  do  this  is  often  strong 
enough  to  discourage  the  attempt  to  establish  what  may  seem 
to  be  a  perfectly  valid  claim.  Attempts  to  enforce  claims  in 
which  the  right  to  recover  appears  to  be  beyond  question 
may  result  in  failure,  and  on  the  other  hand  judgments  are 
often  obtained  by  claimants  in  cases  in  which  the  right  to 
recover  seemed  to  be  very  doubtful.  This  uncertainty  as 
to  the  right  to  recover  has  resulted  in  an  extremely  chaotic 
condition,  not  only  in  employers'  liability  cases  but  in  negli- 
gence litigation  generally. 

The  delay  which  is  incident  to  the  customary  and  orderly 
procedure  of  litigation  in  the  courts  is  frequently  a  serious 
obstacle  to  the  employee  in  the  enforcement  of  his  rights. 
In  litigation  of  this  sort  the  economic  advantage  is  witt  the 


INTRODUCTORY  SURVEY  15 

employer,  for  the  employee  who  has  received  an  injury  which 
resulted  in  any  considerable  incapacity  is  seldom  able  of  him- 
self to  stand  any  great  delay,  and  this  situation  often  forces 
the  settlement  of  meritorious  claims  for  much  less  than  their 
actual  value.  The  basis  of  this  delay  is  the  security  with 
which  the  law  surrounds  the  rights  of  all  litigants,  but  this 
very  solicitude  for  the  rights  of  all  is  frequently  an  instni- 
ment  of  oppression  for  some.  The  time  necessarily  con- 
sumed in  litigation  varies  according  to  circumstances  and 
according  to  the  procedure  in  the  different  states,  but  if  a 
case  is  fought  through  the  court  of  last  resort  several  years 
may  be  consumed  in  the  litigation.  The  claimant  may  be 
an  object  of  charity  during  the  course  of  the  litigation,  and 
there  is  always  the  possibility  of  ultimate  defeat.  His  plead- 
ings must  first  stand  the  test  of  judicial  scrutiny  and  then 
his  facts  must  convince  the  jury.  Any  alleged  error  in  the 
trial  must  be  passed  on  by  an  appellate  court,  so  the  element 
of  delay  may  be  a  very  practical  and  very  serious  obstacle. 
One  phase  of  this  element  of  delay  is  that  of  the  expense  of 
sustaining  the  litigation.  If  a  claimant  is  defeated  in  the 
lower  court  it  is  necessary  for  him  to  stand  the  expense  inci- 
dent to  an  appeal  if  he  desires  to  proceed  with  the  case,  and 
as  this  expense  is  often  prohibitive  he  is  frequently  unable 
to  meet  it  and  is  therefore  forced  to  abandon  the  litigation. 
The  principles  of  the  common  law  which  relate  to  the 
assessment  of  damages  are  responsible  for  the  uncertainty 
as  to  the  amount  of  damages  which  may  be  recovered  when 
an  injured  employee  has  established  his  right  to  recover. 
The  general  principle  upon  which  the  rules  of  damages  in  all 
negligence  cases  are  based  is  that  the  damages  awarded  shall 
be  compensatory,  as  far  as  it  is  possible  to  fix  pecuniary  com- 
pensation for  personal  injuries.  The  assessment  of  damages 
is  essentially  a  question  of  fact,  so  the  amount  is  for  the 


16  WORKMEN'S  COMPENSATION 

jury  to  determine.  The  trial  judge,  or  the  appellate  court, 
does  not  disturb  the  decision  of  the  jury  unless  it  is  evident 
that  the  jury  has  violated  instructions  or  the  amount  awarded 
is  manifestly  inadequate  or  excessive.  The  practical  result 
of  the  operation  of  this  principle  has  been  that  in  many 
negligence  cases  the  damages  fixed  have  appeared  to  be  in- 
adequate but  not  so  inadequate  as  to  justify  interference  with 
the  verdict  of  the  jury,  while  in  other  cases  the  damages  may 
appear  excessive  but  not  so  excessive  as  to  justify  the  setting 
aside  of  the  verdict,  or  the  entering  of  a  remittitur  cutting 
down  the  amount.  Another  result  has  been  the  speculation 
as  to  the  amount  of  damages  in  cases  where  the  right  of  re- 
covery in  itself  is  doubtful,  and  in  those  cases  where  it  ap- 
pears that  the  serious  injuries  that  may  be  shown  will  cause 
the  juries  to  give  large  verdicts.  This  last  element  is  one 
which  is  to  a  considerable  extent  responsible  for  the  large 
volume  of  negligence  litigation  which  has  congested  the  courts. 
The  element  of  uncertainty  as  to  the  collection  of  a  judg- 
ment after  one  has  been  obtained  and  sustained  is  mentioned 
largely  because  of  the  contrast  between  the  security  of  pay- 
ment of  compensation  provided  by  the  best  compensation  laws, 
as  one  of  the  necessary  elements  of  any  well-considered  com- 
pensation system,  and  the  lack  of  security  under  the  common 
law  system.  The  payment  of  a  judgment  at  the  conclusion 
of  the  proceedings  in  litigation  under  the  common  law  depends 
upon  the  ability  of  the  defendant  to  satisfy  the  judgment, 
and  it  is  a  practical  situation  that  the  effect  of  a  judgment 
may  be  lost  by  reason  of  the  inability  of  the  defendant  to 
satisfy  it.  Payment  may  have  been  secured  by  attachment 
or  by  bond,  but  this  is  an  incident  of  the  litigation  rather  than 
a  part  of  it,  so  that  if  it  is  the  misfortune  of  the  plaintiff 
that  the  defendant  is  unable  to  pay  the  judgment,  and  the 
plaintiff  has  no  security  for  its  payment,  his  position  is  virtu- 


INTEODUCTORY  SURVEY  17 

ally  that  of  defeat,  and  it  may  be  even  worse  than  it  would 
have  been  had  he  made  no  effort  to  enforce  his  rights  because 
of  the  obligations  which  may  have  been  incurred  in  the  way 
of  expenses  during  the  course  of  the  litigation.  This  is  a 
practical  condition  which  the  compensation  system  has 
attempted  to  remedy,  as  it  has  attempted  to  remedy  the  other 
defects  of  the  common  law  system.^ 

1  Probably  no  one  case  in  the  many  thousands  of  employers'  liability 
decisions  which  are  recorded  in  the  reports  illustrates  the  different 
defects  of  the  common  law  system  to  which  attention  has  been  called 
better  than  the  Rhode  Island  case  of  Carr  v.  American  Locomotive  Co. 
Many  cases  illustrate  one  or  more  of  the  defects,  but  it  is  rare  that  a 
case  is  found  wliich  shows  the  defects,  and  so  many  of  them,  as  clearly 
as  does  this  case,  and  for  that  reason,  and  for  the  purpose  of  giving 
a  concrete  illustration  of  the  different  defects,  a  brief  history  of  that 
case  is  given  in  this  note. 

The  accident  which  was  responsible  for  this  litigation  happened 
on  June  28,  1902.  Peter  Carr,  a  boy  wlio  was  eighteen  years  of  age 
at  that  time,  was  working  for  the  defendant  in  its  shops  at  Providence, 
Rhode  Island,  and  was  operating  an  oil-burning  rivet  heater.  It  was 
alleged  as  the  basis  of  his  action  that  the  stem  of  a  valve  on  the  heater 
blew  out  and  that  the  plaintiff  was  badly  burned  by  the  oil  which 
escaped.  An  impartial  student  of  this  case  cannot  fail  to  be  impressed 
by  the  fact  that  the  probable  cause  of  this  accident  was  that  Carr 
inadvertently  unscrewed  the  stem  so  far  tliat  it  dropped  out,  so  that 
the  defence  of  contributory  negligence  should  have  been  a  complete 
bar  to  his  action.  The  basis  of  his  action  was  the  alleged  defective 
condition  of  the  valve.  The  case  was  tried  before  a  jury  four  times, 
and  it  was  before  the  Supreme  Court  four  times.  The  final  decision, 
sustaining  the  verdict  rendered  at  the  fourth  trial,  was  rendered  by 
the  Supreme  Court  on  July  12,  1910,  over  eight  years  after  the  acci- 
dent happened. 

The  first  trial  resulted  in  a  disagreement  of  tlie  jurj',  so  tliat  there 
was  nothing  to  do  but  to  submit  the  case  to  the  jury  a  second  time. 

The  second  trial  resulted  in  a  verdict  for  $18,000.00.  This  was 
reversed  by  the  Supreme  Court  on  May  25,  1904,  and  the  case  remanded 
for  another  trial.  The  case  is  reported  in  26  R.  I.  180;  58  Atl.  678. 
The  jury  found  specially  that  the  thread  on  the  stem  of  the  valve  was 
not  in  good  condition,  and  that  the  thread  in  the  body  of  the  valve 
was  not  in  good  condition;  that  the  stem  produced  at  the  trial  was  tlie 
stem  operated  at  the  time  of  the  accident,   and   that   the   burner   and 


18  WORKMEN'S  COMPENSATION 

burner-valve  produced  were  those  operated  at  the  time  of  tlie  accident. 
The  jury  also  found  that  the  accident  was  not  caused  by  an  explosion 
of  gases  in  the  pipe  which  supplied  the  furnace  with  oil.  A  new 
trial  was  granted  because  the  verdict  rendered  was  contrary  to  the 
evidence.  It  was  sliown  that  the  valve  used  was  of  the  same  type  in 
general  use  by  other  concerns. 

The  tliird  trial  resulted  in  a  verdict  for  $20,000.00.  A  motion  for 
a  new  trial  was  denied  by  the  presiding  justice.  The  statute  had  been 
changed  since  the  previous  trial  so  that  a  motion  for  a  new  trial  was 
passed  upon  by  the  presiding  justice  instead  of  the  Supreme  Court. 
The  case  was  reversed  by  the  Supreme  Court  on  July  9,  1908,  and 
remanded  for  another  trial. .  The  case  is  reported  in  29  R.  I.  276 ;  70 
Atl.  196.  The  jury  found  specially:  (1)  That  the  thread  on  the 
stem  in  use  at  the  time  of  the  accident  was  not  in  good  working  order. 
(2)  That  the  thread  on  the  body  of  the  valve  was  in  good  working 
order.  (3)  That  the  stem  prcKluced  at  the  trial  was  not  the  stem  in 
operation  at  the  time  of  the  accident.  (4)  That  the  burner-valve  pro- 
duced exclusive  of  the  stem  was  that  in  operation  at  the  time  of  the 
accident.  (5)  That  the  accident  was  not  caused  by  an  explosion  of 
gases.  The  evidence  preponderated  strongly  against  the  contention  aa 
to  the  condition  of  the  stem  at  the  time  of  the  accident,  and  in  favor 
of  the  contention  that  the  stem  produced  was  the  identical  stem  in 
operation  when  Carr  was  injured.  There  were  fifty-six  different  excep- 
tions as  to  the  admission  of  testimony  upon  which  the  Supreme  Court 
ruled. 

In  the  interval  between  the  second  and  fourth  arguments  in  the 
Supreme  Court  the  case  was  again  before  the  Supreme  Court,  this 
time  for  a  ruling  on  some  of  the  technicalities  involved  in  the  pro- 
cedure on  appeal.  30  R.  I.  330;  75  Atl.  399.  This  decision  was  ren- 
dered March   3,    1910. 

The  fourth  trial  resulted  in  a  verdict  for  $22,895.00  A  motion  for 
a  new  trial  was  made  and  it  was  granted  by  the  presiding  justice.  On 
appeal  his  action  was  reversed  by  the  Supreme  Court  and  judgment 
ordered  entered  on  the  verdict.  This  was  on  July  12,  1910.  The  case 
is  reported  in  31  R.  I.  234;  77  Atl.  104.  The  jury  found  specially: 
( 1 )  That  the  stem  produced  at  the  trial  was  not  the  stem  in  opera- 
tion at  the  time  of  the  accident.  (2)  That  the  thread  of  the  stem  in 
operation  at  the  time  of  the  accident  was  not  in  good  working  condi- 
tion. (3)  That  the  thread  in  the  body  of  the  valve  was  in  good 
working  condition.  (4)  That  the  stem  in  the  middle  valve  blew  out 
while  being  operated  by  the  plaintiff.  (5)  That  the  agents  of  the 
defendant  in  charge  of  the  boiler  shop  had  been  notified  that  the  stem 
had  blown  out  prior  to  this  accident.  The  court  held  that  after  three 
concurring  verdicts  it  would  no  longer   interfere  with   the  findings   of 


INTRODUCTORY  SURVEY  19 

the   jury   where   no   errors   of    law   had    been    committed.     One   justice 
dissented  from  tlie  decision  of  the  Supreme  Court. 

The  history  of  this  case  is  given  with  some  detail  because  it  is  such 
a  good  illustration  of  the  different  defects  in  the  common  law  sj'stem 
to  which  attention  has  been  called.  In  the  first  place,  the  contention 
of  the  plaintiff  that  tlie  stem  blew  out  and  that  of  the  defendant  that 
the  plaintiff  inadvertently  unscrewed  it  mitil  it  dropped  out  gave  rise 
to  a  controversy  as  to  the  very  basis  of  the  plaintiff's  right  of  recovery, 
and  compelled  the  submission  of  the  issue  to  a  jury  as  the  only  means 
of  settlement.  The  disagreement  of  the  first  jury  which  passed  on  the 
issue  showed  that  there  was  some  reasonable  doubt  as  to  just  how  the 
accident  happened,  and  the  action  of  the  Supreme  Court  in  setting 
aside  two  verdicts  showed  that  the  jury  must  have  disregarded  some 
of  the  evidence  which  the  defendant  submitted.  This  phase  of  the  case 
serves  to  illustrate  one  factor  which  must  always  be  considered  in 
negligence  cases,  and  that  is  the  sympatliy  wliich  the  jury  generally 
feels  for  an  injured  plaintiff,  particularly  with  a  corporation  for  a 
defendant,  and  that  element  is  plainly  present  in  this  case.  This  sym- 
pathy may  develop  into  a  prejudice,  so  that  facts  are  often  disregarded 
by  a  jury  in  order  to  render  a  verdict  for  the  plaintiff.  This  is  a 
disturbing  force  wiiich  is  responsible  for  much  of  the  uncertainty  which 
is   present   in  negligence  litigation. 

Tlie  element  of  delay  is  shown  by  the  fact  that  over  eight  years 
elapsed  between  the  time  of  the  accident  and  final  judgment.  It  was 
nearly  two  years  from  the  time  of  the  accident  to  the  first  reversal; 
over  four  years  elapsed  between  the  first  and  second  decisions  of  the 
Supreme  Court,  and  just  a  little  over  two  years  between  the  second 
reversal  and  final  judgment  for  the  plaintiff.  The  delay  that  may  be 
incident  to  litigation  under  the  common  law  system  is  so  clearly  shown 
by  this  case  tliat  further  comment  on  such  possibilities  is  unnecessary. 

The  first  verdict  for  $18,000.00,  the  second  for  $20,000.00  and  the 
third  for  $22,895.00  show  the  uncertainty  as  to  the  amount  of  recovery. 
The  plaintiff  was  seriously  injured,  the  jury  had  ample  opportunity 
to  speculate  on  the  amount  of  damages,  and  it  appears  that  they 
exercised  this  privilege  about  to  the  limit.  Each  succeeding  jury  was 
doubtless  influenced  by  the  fact  of  the  preceding  verdict,  for  it  fre- 
quently happens  that  when  an  appellate  court  has  set  aside  a  verdict 
the  next  succeeding  verdict  is  larger  than  its  predecessor. 

The  element  of  uncertainty  as  to  the  collection  of  the  judgment  does 
not  appear  to  have  been  present  in  this  case,  for  the  defendant  was  a 
large  corporation  and  was  doubtless  able  to  satisfy  the  final  judgment. 


20  WORKMEN'S  COMPENSATION 

REFERENCES 

The  Beginnings  of  Industrial  Development,  R.  T.  Ely,  Indus- 
trial Evolution,  Chapter  III. 

Changes  in  England  Since  1760,  F.  L.  MeVey,  Modern  Indus- 
trialism, Chapter  II. 

The  Industrial  Eevolution  in  England,  F.  A.  Ogg,  Social  Prog- 
ress in  Contemporary  Europe,  Chapter  VII. 
^Industrial  Evolution  of  America,  F.  L.  McVey,  Modern  Indus- 
trialism, Chapter  III. 

Man  and  Society  versus  Machinery,  J.  G.  Brooks,  The  Social 
Unrest,  Chapter  VI. 

The  Eelation  of  Master  and  Servant,  E.  S.  Berry,  Liability  and 
Compensation  Lectures,  page  14. 

The  Law  of  Master  and  Servant,  Blackstone's  Commentaries, 
Book  I,  Chapter  XIV,  and  Kent's  Commentaries,  14th  edi- 
tion. Volume  II,  pages  348-260.  (Star  paging.  Lecture 
XXXIL) 

The  Employers'  Liability  Law,  C.  R.  Henderson,  Industrial  In- 
surance in  the  United  States,  Chapter  V. 
^Liability  of  Employers  for  Injuries  to  Employees,  L.  D.  Clark, 
The  Law  of  the  Employment  of  Labor,  Chapter  VII. 

Employers'  Liability  in  the  United  States,  L.  D.  Clark,  Bulletin 
of  the  Bureau  of  Labor  (Washington),  Volume  XVI,  pages 
1-120.      (January,  1908.) 

Injured  in  the  Course  of  Duty,  William  Hard,  and  others,  a 
pamphlet  consisting  of  articles  reprinted  from  Everybody's 
Magazine,  and  other  matter. 

The  Indictment  of  Employers'  Liability,  I.  M.  Rubinow,  Social 
Insurance,  Chapter  VI. 

Case  for  Compensation,  I.  M.  Rubinow,  Social  Insurance,  Chap- 
ter VII. 

Compensation  for  Industrial  Accidents,  L.  W.  Hatch,  The  In- 
surance Institute  of  Hartford,  Volume  IV,  page  22. 


CHAPTER  II 

INDUSTRIAL   ACCIDENTS    AND    ACCIDENT    INSURANCE 

The  industrial  accident  is  one  of  the  regrettable  incidents 
of  the  industrial  era.  With  the  change  from  hand  tools  to 
power-driven  machinery  and  as  that  machinery  became  more 
and  more  complicated,  and  as  the  use  of  machinery  increased 
the  pressure  of  industrial  operations,  the  ability  of  the  em- 
ployee to  protect  himself  from  the  hazards  to  which  he  was 
necessarily  exposed  became  lessened,  until  it  seemed  as  if  in 
some  occupations  the  employee  was  obliged  to  expose  himself 
to  hazards  against  the  effects  of  which  it  was  almost  impossible 
to  protect  him.  The  general  subject  of  industrial  accidents 
cannot  be  limited  in  its  application  to  the  relation  of  employer 
and  employee,  for  there  are  many  dangers  connected  with  our 
modern  industrial  operations  to  which  members  of  the  public 
as  well  as  the  employees  engaged  in  the  work  are  exposed,  but 
as  the  study  of  the  industrial  accident  in  its  application  to 
workmen's  compensation  deals  only  with  the  relation  of  em- 
ployer and  employee,  the  subject  will  not  be  considered  in  its 
application  to  society  in  general  except  as  such  consideration 
may  be  incidental  to  this  phase  of  the  subject. 

As  the  common  law  rules  of  employers'  liability  are  based 
upon  the  assumption  of  political,  economic  and  social  inde- 
pendence, the  position  of  employer  and  employee  before  the 
law  was  one  of  equality.  The  individual  employee  could,  in 
theory,  bargain  with  his  employer  on  a  basis  of  equality ;  he 
could  work  for  any  particular  employer  or  not,  just  as  he 

chose,  and  as  he  had  this  theoretical  option  to  leave  the  service 

21 


22  WORKMEN'S  COMPENSATION 

of  his  employer  if  tlie  working  conditions  for  any  reason  were 
not  to  his  liking,  he  was  consequently  held  by  the  law  to  as- 
sume the  risk  of  any  hazards  that  might  be  inherent  in  his 
employment,  and  also  to  assume  the  risk  of  injury  from  the 
negligence  of  any  competent  fellow-servants  who  might  be 
employed  with  him.  This  principle,  it  will  be  seen,  is  the 
basis  of  the  defence  of  assumption  of  risk  and  of  the  fellow- 
servant  rule.  The  defence  of  contributory  negligence  does 
not  rest  so  much  upon  this  principle  of  the  legal  equality  of 
employer  and  employee  as  it  does  upon  the  general  obligation 
which  rests  upon  each  individual  to  protect  himself  from  all 
dangers,  and  the  resulting  corollary  that  if  any  one  is  injured 
by  his  own  negligence  he  has  nobody  but  himself  to  blame, 
and  there  is,  therefore,  no  reason  why  any  one  else  should  be 
held  responsible  for  his  injury.^ 

1  The  extent  to  which  the  common  law  carries  this  individualistic 
theory  is  well  illustrated  by  the  case  of  Hayden  v.  Smithville  Mfg.  Co., 
29  Conn.  548,  decided  in  1861.  In  this  case  the  plaintiff,  a  boy  ten 
years  old,  was  injured  by  having  his  right  hand  caught  in  the  gearing 
of  a  spinning  frame  in  the  mill  of  the  defendant,  on  April  6,  1859, 
after  he  had  been  in  the  defendant's  employ  only  three  weeks.  The 
case  was  submitted  to  the  jury,  a  verdict  for  $1,875.00  was  rendered  in 
favour  of  the  plaintiflF,  the  defendant  made  a  motion  for  a  new  trial,  and 
a  new  trial  was  advised.  The  defendant  asked  the  trial  judge  to  give 
the  jury  four  specific  instructions  as  to  the  law,  none  of  which  were 
given  as  requested.  The  action  of  the  Supreme  Court  of  Errors  in 
granting  a  new  trial  was  based  on  the  modification  by  the  trial  judge 
of  the  second  and  third  requests  of  the  defendant,  which  were  as  fol- 
lows:— 

"2.  That  the  general  rule,  resulting  from  considerations  as  well  of 
justice  as  of  policy,  is,  that  he  who  engages  in  the  employment  of  an- 
other for  the  performance  of  specific  duties  and  services  for  compensa- 
tion, takes  upon  himself  tlie  natural  and  ordinary  risks  and  perils  inci- 
dent to  the  performance  of  such  services. 

"3.  That  he  who  enters  the  service  of  another  with  the  machinery  and 
implements  of  the  employer's  business  in  a  given  condition,  with  the 
knowledge  of  such  condition,  waives  any  claim  upon  the  employer  to 
furnish  other  and  greater  safeguards." 

The  Supreme  Court  of  Errors  held  that  these  requests  were  correct 


INDUSTRIAL  ACCIDENTS  23 

The  general  subject  of  the  industrial  accident  cannot  be 
considered  here  in  any  detail.  It  must  be  assumed  for  our 
purpose  that  the  industrial  accident  is  one  of  the  unfortunate 
incidents  of  our  industrial  life.  Its  causes  and  effects  can 
and  will  be  briefly  outlined.  While  this  problem  may  become 
apparent  by  the  sight  of  any  workman  who  has  received  seri- 
ous injuries  in  connection  with  his  work,  or  the  knowledge 
of  a  family  left  destitute  by  reason  of  an  industrial  fatality, 
we  are  in  the  beginning  handicaj^ped  in  any  general  study 
of  the  subject  because  of  the  lack  of  general  statistics.  This 
observation  is  particularly  true  in  its  application  to  the 
United  States,  for  as  this  country  has  lagged  behind  the  rest 

statements  of  the  law,  and  that  they  should  have  been  allowed  by  the 
trial  judge.  The  decision  shows  how  harsh  and  inequitable  the  com- 
mon law  rules  were  in  their  application  to  injuries  received  by  persons 
of  tender  age  and  how  the  principles  of  individualism  were  carried  to 
the  extreme.     Note  the  following  quotation  from  the  opinion; 

"Every  manufacturer  has  a  right  to  choose  tlie  machinery  to  be  used 
in  his  business  and  to  conduct  that  business  in  the  manner  most  agree- 
able to  himself  provided  he  does  not  tliereby  violate  the  law  of  the 
land.  He  may  select  his  appliances,  and  run  his  mill  with  old  or  new 
machinery,  just  as  he  may  ride  in  an  old  or  new  carriage,  navigate  an 
old  or  new  vessel,  or  occupy  an  old  or  new  house,  as  he  pleases.  The 
employee  having  knowledge  of  the  circumstances,  and  entering  his  serv- 
ice for  the  stipulated  reward,  cannot  complain  of  the  peculiar  taste  and 
habits  of  the  employer,  nor  sue  him  for  damages  sustained  and  result- 
ing from  that  peculiar  service." 

As   to   this   particular   case  the  courts   said:  — 

"The  employee  here  was  acquainted  with  the  hazards  of  the  business 
in  which  he  was  engaged,  and  with  the  kind  of  machinery  used  in 
carrying  on  the  business.  He  must  be  held  to  have  understood  the  ordi- 
nary hazards  attending  his  employment  and  therefore  to  have  volun- 
tarily taken  upon  himself  this  hazard  when  he  entered  into  the  defend- 
ant's service." 

This  case  ia  cited  merely  as  an  illustrative  case  of  the  extreme 
doctrines  of  the  common  law.  Such  a  decision  would  be  impossible 
imder  the  common  law  system  of  employers'  liability  at  the  present 
time,  because  of  the  different  Child  Labor  laws  which  have  been  passed, 
and  also  because  of  the  changed  attitude  of  the  courts  generally  as  to 
negligence  cases  in  which  the  rights  of  children  of  tender  years  are 
involved. 


24  W0EKME:N''S  COMPEi^SATlON 

of  the  civilised  world  in  many  matters  of  social  legislation, 
the  proper  basis  for  the  study  of  many  of  our  social  problems 
is  lacking.  While  the  problem  of  the  industrial  accident 
as  the  basis  of  the  subject  of  employers'  liability  is  one 
which  is  national  in  its  scope,  it  is  local  in  its  application 
and  solution  because  of  our  system  of  government.  The 
jurisdiction  of  Congress  is  limited  in  matters  of  this  nature, 
so  that  the  problem  as  a  whole  is  one  within  the  control 
of  the  states,  and  the  conditions  in  the  different  states  are  so 
diverse  that  uniformity  in  matters  relating  to  employers' 
liability  is  practically  impossible,  so  the  statistics  relating 
to  the  problem  of  the  industrial  accident  in  its  application 
to  the  country  as  a  whole  have  never  been  collected  and  com- 
piled in  workable  shape.  The  different  compilations,  out- 
side of  the  few  matters  over  which  Congress  has  jurisdiction, 
are  limited  to  specific  localities  or  to  the  confines  of  a  par- 
ticular state.  The  statistics  which  we  have,  however,  are 
sufficient  to  show  the  extent  of  the  problem.-^ 

1  The  authoritative  investigations  of  the  United  States  Government 
are  limited  to  matters  of  federal  jurisdiction,  and  this  relates  prin- 
cipally to  the  instrumentalities  of  interstate  commerce,  so  the  best 
statistics  which  we  have  as  a  result  of  federal  investigations  are  those 
collected  by  the  Interstate  Commerce  Commission.  This  does  not  mean 
that  general  statistics  are  not  collected  by  the  federal  government, 
for  such  investigations  and  compilations  have  been  made  for  a  num- 
ber of  years  by  what  is  now  the  Bureau  of  Labor  Statistics  of  the 
Department  of  Labor,  and  the  results  constitute  a  valuable  contri- 
bution to  the  literature  of  the  subject  of  industrial  accidents. 

The  Labor  Bureaus  of  some  of  the  states  attempt  to  collect  and 
classify  the  statistics  of  industrial  accidents  in  their  own  jurisdictions, 
but  as  there  is  little  or  no  uniformity  in  the  work  as  conducted  by 
the  different  states  the  resulting  statistics  are  of  value  only  as  applied 
to  the  problem  in  the  particular  jurisdiction  in  which  the  statistics 
were  collected,  and  their  value  depends  on  tlie  manner  in  which  the 
work  was  done.  It  is  an  unfortunate  fact  that  too  often  the  Labor 
Bureaus  of  the  different  states  do  not  have  the  facilities  at  their  com- 
mand  for    full    investigations.     Voluntary   investigations   are   also   fre- 


INDUSTRIAL  ACCIDENTS  25 

The  classification  of  industrial  accidents  as  to  causes  with 
any  degTee  of  accuracy  is  very  difficult,  if  not  impossible. 
The  most  general  division  in  any  classification  would  sepa- 
rate the  accidents  into  those  which  were  caused  by  the  fault 
of  the  employer,  those  caused  by  the  fault  of  the  employee, 
and  those  caused  by  dangers  and  hazards  which  are  inherent 
in  the  particular  occupation  in  which  the  injured  was  en- 
gaged. This  general  classification  is  satisfactory  for  illustra- 
tive purposes,  and  a  casual  examination  of  even  a  compara- 
tively small  number  of  industrial  accidents,  taken  at  random 
and  without  any  attempt  at  selection,  would  soon  convince 
the  investigator  that  the  greater  number  of  the  accidents  fell 
within  the  category  of  those  caused  by  the  fault  of  the  in- 
jured himself,  or  were  caused  by  the  hazards  incident  to 
the  business,  and  that  those  for  which  the  employer  could 
be  held  legally  responsible  constituted  a  very  small  propor- 
tion of  the  entire  number.^ 

This  problem  in  its  economic  aspect  is  primarily  one  of 
sustenance  for  the  injured  and  his  dependents  while  he  is 
disabled  as  a  result  of  his  injuries,  or  of  support  for  the 
dependents  of  a  M^orkman  who  meets  his  death  by  reason  of 
an  industrial  fatality.  The  problem  in  its  ramifications  soon 
leads  into  the  whole  field  of  social  insurance,  for  when  con- 
sidering the  destitution  caused  by  industrial  accidents  at- 
tention is  inevitably  directed  to  the  closely  related  subject 
of  occupational  diseases,  and  then  to  provision  for  workers 
worn  out  by  lives  of  toil  and  for  the  dependents  of  such 

quently  made  by  economists  and  social  workers.  Investigations  of 
this  nature  are  usually  confined  to  particular  industries  or  particular 
localities,  so  they  are  not  general  in  their  scope,  but  their  value  must 
not  be  underestimated  in  the  general  study  of  the  subject. 

1  For  a  most  excellent,  concise  and  available  summary  as  to  the 
causes  of  industrial  accidents  see  chapter  V  of  Rubinow's  Social  In- 
surance^ 


26  WOKKMEN'S  COMPENSATION 

deceased  workers  for  whom  the  deceased  have  been  able  to 
make  no  provision  during  their  lifetime.  This  brief  study 
must  be  confined  as  closely  as  possible  to  the  subject  of  in- 
dustrial accidents  in  its  relation  to  employers'  liability,  both 
imder  the  common  law  system  and  under  the  compensation 
system. 

Although  the  proportion  of  accidental  injuries  for  which 
the  employer  can  be  held  responsible  under  the  common  law 
s^^stem  is  comparatively  small,  the  injured  employee  instinc- 
tively looks  to  his  employer  for  compensation  for  his  injury 
or  for  assistance  during  his  disability,  and  if  compensation 
or  assistance  is  refused  he  then  considers  whether  or  not 
he  has  any  legal  redress  against  his  employer  and  if  he  de- 
cides to  enter  suit  the  employer  is  compelled  to  come  into 
court  and  defend.  Litigation  is  essentially  antagonistic  in 
its  nature,  for  one  party  is  attempting  to  establish  a  right 
which  the  other  denies,  and  the  great  volume  of  employers' 
liability  litigation  has  engendered  a  spirit  of  hostility  be- 
tween employers  and  employees,  for  in  order  to  establish  or 
defeat  alleged  rights  facts  must  often  be  distorted  and  it  seems 
in  reviewing  many  employers'  liability  cases  as  if  many  must 
have  been  won  by  testimony  which  must  have  been  perjured. 
Even  if  there  is  no  suspicion  that  perjured  testimony  will 
be  produced  in  a  case,  the  natural  sjonpathy  of  a  jury  for  an 
injured  plaintiff  is  a  factor  which  must  be  taken  into  con- 
sideration. The  result  is,  therefore,  that  recovery  is  often 
had  in  cases  in  which,  according  to  the  best  evidence  that 
could  be  obtained  by  defendants  prior  to  trial,  no  recovery 
seemed  possible. 

Inasmuch  as  the  legal  rights  which  an  injured  employee 
has  against  his  employer  at  common  law  afford  no  redress 
in  the  greater  number  of  cases,  and  the  question  of  support 
for  the  injured  and  his  family  during  his  disability,  and  for 


Il^DUSTRIAL  ACCIDENTS  27 

his  dependents  in  case  of  death  as  a  result  of  the  injury,  was 
a  pressing  social  and  economic  problem,  different  methods 
were  from  time  to  time  devised  to  mitigate  the  financial 
effects  of  these  casualties.  As  the  matter  of  protection 
against  such  misfortune  through  accumulations  prompted 
by  individual  foresight  is  a  negligible  factor,  because  of  the 
inability  of  the  average  employee  to  save  from  his  wages, 
so  the  problem  is  one  of  collective  action  through  insurance 
of  some  sort,  and  the  different  methods  of  insurance  by  volun- 
tary action  will  be  outlined  in  the  balance  of  this  chapter. 
This  action  may  be  taken  wholly  by  the  employee,  by  co- 
operation of  employer  and  employee,  or,  wholly  by  the  em- 
ployer. The  methods  considered  will  be  those  adopted  with- 
out any  legal  compulsion,  and  which,  therefore,  have  no 
effect  on  the  right  of  the  employee  to  bring  action  against  his 
employer  if  he  desires  to  do  so,  even  though  the  insurance 
benefits  may  have  been  provided  wholly  at  the  expense  of 
the  employer. 

Before  discussing  the  matter  of  the  protection  of  the  em- 
ployee it  may  be  well  to  make  mention  in  the  way  of  a  brief 
explanation  of  a  method  adopted  by  many  employers  for  the 
protection  of  their  liability,  and  that  is  by  liability  insurance. 
The  function  of  this  branch  of  underwriting  is  to  protect 
the  legal  liability  of  an  assured  when  claims  are  made  against 
him  for  injuries  alleged  to  have  been  sustained  by  reason 
of  his  negligence.  In  pursuance  of  this  function  the  gen- 
eral field  of  liability  underwriting  is  divided  into  two 
branches,  employers'  liability  insurance  and  public  liability 
insurance.  The  fonner,  as  its  name  implies,  is  that  branch 
which  assumes  the  obligations  of  an  employer  for  his  legal 
liability  to  an  injured  employee ;  the  latter  assumes  the  obli- 
gations of  an  assured  for  his  legal  liability  to  persons  not 
employees  who  may  allege  injuries  because  of  his  negligence. 


28  WORKMEN'S  COMPENSATION 

It  is  only  with  the  insurance  of  an  employer's  liability  that 
we  are  here  concerned. 

The  purpose  of  liability  insurance  in  its  inception  was  to 
indemnify  the  employer  for  damages  for  which  he  may  have 
been  held  liable  to  injured  employees,  but  as  this  form  of 
insurance  was  applicable  in  cases  where  the  relation  of  em- 
ployer and  employee  did  not  exist  the  liability  contract  was 
soon  adapted  to  the  protection  of  the  legal  liability  of  the 
assured  in  a  great  variety  of  situations.  Its  inception  may 
be  attributed  to  the  passage  of  the  Employers'  Liability  Act 
in  England  in  1880,  for  it  was  supposed  that  this  legislation 
increased  the  liability  of  the  employer  to  his  employee  to 
such  an  extent  that  protection  of  that  liability  by  insurance 
was  necessary.  Liability  underwriting  was  begim  in  Eng- 
land shortly  after  the  passage  of  that  act,  and  it  was  intro- 
duced in  the  United  States  a  few  years  after  its  inception. 
The  spread  of  employers'  liability  insurance  was  gradual 
at  first  and  rapid  later.  In  some  localities  the  practice  of 
employers  in  thus  protecting  their  legal  liability  was  almost 
universal,  while  in  other  localities  it  was  limited,  for  as  there 
was  no  legal  compulsion  on  the  employer  to  thus  protect  him- 
self it  was  optional  on  his  part  whether  to  do  so  or  not,  and 
his  attitude  towards  the  exercise  of  this  option  depended 
largely  on  local  conditions.  In  localities  where  there  was 
a  considerable  volume  of  employers'  liability  litigation  the 
practice  of  insurance  was  pretty  general,  while  in  those 
localities  where  litigation  of  this  nature  was  infrequent  the 
necessity  of  liability  insurance  was  not. so  apparent  and  the 
practice  was  not  so  general. 

The  purpose  of  the  liability  contract  in  its  relation  to  the 
common  law  system  of  employers'  liability,  and  to  the  law 
of  Negligence  generally,  is  to  indemnify  the  assured  when  he 
has  been  compelled  to  respond  in  damages,  and  not  to  insure 


INDUSTRIAL  ACCIDENTS  29 

the  payment  of  a  judgment  to  a  successful  plaintiff.  This 
principle  in  the  theory  of  liability  underwriting  is  mentioned, 
and  it  must  be  mentioned  with  emphasis,  because  of  its  in- 
fluence in  the  matter  of  the  underwriting  of  the  obligation 
imposed  on  employers  by  the  compensation  system.  As  this 
lack  of  certainty  as  to  the  payment  of  a  judgment  was  one 
of  the  defects  of  the  common  law  system,  so  the  element 
of  certainty  of  payment  of  compensation  benefits  is  one  of 
the  cardinal  principles  of  compensation,  and  no  compensation 
system  is  complete  which  does  not  provide  for  the  security 
of  the  payment  of  the  obligations  which  it  imposes.  A  great 
deal  of  the  controversy  over  the  introduction  of  the  com- 
pensation system  in  the  different  states  of  the  United  States 
has  centred  around  the  different  methods  of  security  which 
should  be  provided  for  the  payment  of  compensation.  This 
phase  of  the  subject  is  discussed  with  some  detail  in  another 
chapter.^ 

In  practice  liability  insurance  often  compensates  injured 
employees  in  cases  where  otherwise  nothing  would  have  been 
paid  to  them.  The  insurer  in  a  liability  contract  undertakes 
the  obligations  of  the  assured  within  the  limitations  of  the 
contract,  and  when  an  accident  has  been  duly  reported  it 
is  optional  with  the  insurer  after  a  claim  for  damages  has 
been  made  to  settle  or  to  contest.  Frequently  a  liability 
company  will  settle  claims  without  merit  in  order  to  avoid 
litigation,  and  will  settle  doubtful  claims  to  avoid  the  im- 
certainty  of  litigation,  and  this  is  often  done  in  cases  where 
the  employer  would  have  fought  the  case  to  the  limit  if  he 
had  not  been  protected  by  liability  insurance.  While,  how- 
ever, the  liability  contract  as  written  to  protect  the  common 
law  obligation  may  operate  for  the  benefit  of  an  injured  em- 

1  See  cliapter  VIII,  The  Insurance  of  the  Compensation  Obligation. 


30  WOKKMEN'S  COMPENSATION 

ployee  in  certain  individual  cases,  it  cannot  be  claimed  that 
it  was  any  general  solution  of  the  financial  and  social  prob- 
lem of  the  industrial  accident,  for  it  was  written  primarily 
for  the  benefit  of  the  employer  rather  than  that  of  the  em- 
ployee, and  any  benefit  that  the  employee  may  have  received 
from  it  was  only  incidental. 

Protection  by  means  of  accident  insurance  which  is  car- 
ried for  his  benefit  may  afford  the  injured  some  mitigation 
against  the  financial  effects  of  an  industrial  accident.  Acci- 
dent insurance  is  that  branch  of  underwriting  which  was 
devised  to  indemnify  the  assured  in  case  of  injuries  sustained 
by  accident,  and  its  purpose  is  to  afford  indemnity  to  a 
policyholder  who  has  been  disabled  because  of  an  accidental 
injury.  In  its  simplest  form  the  accident  contract  is  an 
agreement  between  the  insurer  and  the  assured,  for  a  finan- 
cial consideration  paid  by  the  assured,  to  pay  to  the  assured 
certain  amounts  of  money  if  the  assured  sustains  injuries 
by  accident  during  the  policy  period,  unless,  perchance 
the  circumstances  of  the  accident  may  bring  the  case  within 
some  of  the  exceptions  in  the  policy,  if  there  are  any  limi- 
tations in  it.  This  is  the  substance  of  the  accident  contract 
when  it  is  made  between  the  insurer  and  the  individual 
assured.  It  may  become  more  complex  when  in  its  applica- 
tion to  the  relation  of  employer  and  employee  the  interest 
of  the  employer  enters  into  the  transaction,  for  if  the  em- 
ployer pays  all  or  any  part  of  the  premium  in  order  to 
secure  this  protection  for  the  employee  his  interest  must  be 
considered. 

Accident  insurance  is  one  of  the  underwriting  develop- 
ments of  the  industrial  era.  Although  the  idea  of  accident 
insurance  seems  to  have  originated  almost  simultaneously  in 
England  and  the  United  States  during  the  latter  part  of  the 
first  half  of  the  nineteenth  century  it  was  not  put  into 


INDUSTKIAL  ACCIDENTS  31 

practical  operation  in  the  United  States  until  some  years 
after  its  inception  in  England,  so  the  credit  for  its  origin  must 
be  given  to  England  while  that  for  its  development  belongs  to 
this  country. 

In  its  inception  accident  insurance  was  devised  to  afford 
indemnity  in  cases  of  accidents  sustained  during  the  course 
of  railway  travel,  and  its  inception  is  almost  simultaneous 
with  the  inception  of  this  form  of  transportation.  The 
hazards  to  which  a  person  was  exposed  in  connection  wdth 
travel  on  steam  cars  were  so  apparent,  in  contrast  to  the  com- 
parative lack  of  danger  in  other  forms  of  transportation,  and 
the  means  of  protection  against  such  accidents  were  so  lim- 
ited, that  it  was  considered  that  the  passenger  was  in  need 
of  such  indemnity  and  so  this  form  of  underwriting  was  de- 
vised. At  the  time  of  its  inception  the  dangers  of  accidental 
injury  were  more  apparent  in  connection  with  railway  travel 
than  with  any  other  form  of  activity,  but  as  time  passed 
and  as  the  conditions  of  living  and  industrial  conditions 
changed,  and  as  the  percentage  of  accidents  from  railway 
travel  became  smaller  and  smaller  in  proportion  to  the  whole 
number  of  accidental  injuries,  the  necessity  of  accident  in- 
surance protection  for  accidental  injuries  from  any  cause 
became  more  and  more  apparent,  so  the  accident  contract 
was  broadened  to  cover  accidents  which  resulted  from  any 
dangers  to  which  the  assured  might  be  exposed. 

The  different  methods  in  which  accident  insurance  is  con- 
ducted must  be  considered,  and  it  may  be  said  that  there  are 
two  general  methods,  insurance  by  stock  companies  and  by 
mutual  associations.  The  difference  in  the  names  indicates 
the  distinction  between  the  methods.  The  stock  company 
makes  the  contract  with  each  individual  assured,  and  its 
capital  stock  and  other  assets  are  all  pledged  to  the  fulfilment 
of   each    individual    contract    independent    of    any   further 


82  WOEKMEN'S  COMPENSATION 

premium  payments  on  the  part  of  the  policyholder,  while 
in  the  mutual  association  there  is  no  capital  stock,  the  dif- 
ferent members  being  in  fact  the  stockholders,  and  if  the 
assets  are  insufficient  to  liquidate  the  outstanding  obligations 
of  the  association  the  members  are  liable  to  assessment  in 
order  that  the  payments  may  be  made. 

The  stock  companies  are  practically  uniform  in  their  struc- 
ture and  purpose,  in  that  each  has  its  specified  capital  and 
conducts  its  business  for  the  profit  of  its  stockholders  the 
same  as  any  other  business  corporation,  while  the  mutual 
associations  are  conducted  only  in  the  interest  of  the  members 
who  compose  them,  and  any  profits  that  may  accinie  from 
their  operation  belong  to  the  members.  Many  diversities 
appear  in  mutual  organisations,  both  as  to  size,  the  character 
of  their  business,  and  the  manner  in  which  it  is  conducted. 
Some  mutual  companies  may  have  little  to  distinguish  them 
from  stock  companies  except  the  fact  of  mutuality,  for  they 
may  conduct  their  business  on  the  same  plan  and  over  a  large 
area,  while  others  may  be  confined  to  a  special  class  of  risks 
or  to  a  limited  area.  They  may  be  formally  incorporated, 
or  they  may  be  merely  voluntary  associations;  they  may  be 
adjuncts  of  fraternal  organisations,  or  they  may  be  entirely 
independent  of  any  such  organisations  ;  and  many  other  diver- 
sities may  appear  in  their  scope  and  operation  which  cannot 
be  enumerated  here.  These  suggestions  are  intended  to  show 
only  some  of  the  chief  diversities  in  the  organisations  for 
the  conduct  of  accident  insurance  which  are  based  on  the 
principle  of  mutuality  rather  than  that  of  profit  for  stock- 
holders. 

In  scientific  accident  underwriting  the  premiums  which 
must  be  paid  for  accident  insurance  protection  vary  accord- 
ing to  the  occupation  in  which  the  assured  is  engaged.  The 
practical  situation  is  recognised  that  in  some  occupations  a 


INDUSTRIAL  ACCIDENTS  33 

person  is  exposed  to  greater  dangers  than  in  others,  and  this 
method  of  graduating  the  premiums  according  to  occupational 
hazards  is  the  only  feasible  method  of  distributing  the  hazards 
that  has  as  yet  been  devised.     The  different  classifications 
in  accident  underwriting  are  gTaded,  in  a  general  way,  accord- 
ing to  the  dangers  incident  to  the  different  occupations  in 
which  policyholders  are  engaged,  the  theory  being  that  each 
classification  should  bear  its  own  losses,  and  that  those  in- 
sured under  one  classification  should  not  be  called  on  to  pay 
any  part  of  the  losses  of  any  other  classifications,  particu- 
larly the  losses  of  a  more  hazardous  classification.     The  basis 
of  the  classifications,  generally  speaking,  is  the  proximity  to 
dangerous  machinery,  the  exposure  to  dangerous  manufactur- 
ing processes,  or  employment  in  work  which  from  its  nature 
and  surroundings  may  appear  to,  be  particularly  dangerous. 
The  result  of  this  practice  is  that  the  price  of  this  pro- 
tection is  practically  prohibitive  to  those  who  need  it  most. 
The  person  who  is  engaged  in  an  occupation  which  involves 
little  or  no  occupational  dangers  can  purchase  a  compara- 
tively large  amount  of  accident  insurance  for  a  comparatively 
small   premium,   while   as  to  the  person   in   an  occupation 
which  involves  a  large  amount  of  occupational  dangers,  and 
who,  therefore,   needs   accident  insurance  much  more  than 
the  person  who  is  exposed  to  little  or  no  occupational  danger, 
the  situation  is  just  the  reverse.     He  must  pay  a  compara- 
tively large  premium  for  a  comparatively  small  amount  of 
protection.     Another  factor  in  addition  to  the  high  cost  which 
makes  accident  insurance  as  conducted  on  a  scientific  basis 
almost  ineft'ective  in  its  relation  to  those  engaged  in  hazard- 
ous occupations  is  the  fact  that  as  the  occupational  hazards 
increase  the  amount  of  accident  insurance  which  a  company 
will  write  for  any  individual  policyholder  decreases.     While 
the  amount  that  will  be  written  for  a  policyholder  in  a  non- 


34  WORKMEN'S  COMPENSATION 

hazardous  occupation  is  almost  unlimited,  the  limit  is  succes- 
sively lowered  as  the  dangers  in  the  occupations  increase,  so 
that  in  the  most  dangerous  occupations  the  limit  which  a 
company  will  take  is  very  small,  if  in  fact  any  insurance 
at  all  will  be  written  for  persons  engaged  in  those  occupa- 
tions.^ 

In  order  to  afford  some  relief  against  this  practice  of 
many  of  the  companies  of  virtually  eliminating  the  business 
of  the  hazardous  classifications,  companies  have  been  formed 
which  specialise  in  the  business  of  extending  accident  in- 
surance protection  to  workingmen.  The  business  conducted 
by  these  companies  goes  by  the  name  of  "industrial  accident 
insurance."  While  the  principles  on  which  these  companies 
conduct  their  underwriting  are  identical  with  those  on  which 

1  An  interesting  exception  to  this  attitude  of  many  of  the  accident 
companies  of  not  soliciting  business  among  those  engaged  in  hazardous 
occupations  is  found  in  the  so  called  "four  period"  or  "pay  order" 
policies.  This  is  a  method  in  which  the  co-operation  of  the  employer  is 
enlisted  in  securing  the  accident  insurance  of  the  employee.  Permis- 
sion is  obtained  from  the  employer  to  solicit  the  employees  individually 
for  accident  insurance,  but  the  employee  instead  of  paying  the  premium 
as  a  whole  is  permitted  to  give  orders  on  his  employer  for  its  pay- 
ment in  instalments,  usually  in  four  payments,  from  which  custom 
the  names  applied  to  this  form  of  insurance  are  derived.  The  con- 
tracts are  made  with  each  individual  employee  and  not  with  the 
employees  as  a  whole,  and  it  is  entirely  optional  with  the  employee 
as  to  whether  or  not  to  insure  when  he  is  solicited,  the  employer 
taking  no  part  in  the  matter  except  to  sanction  the  solicitation  and 
honour  the  orders  for  premium  payments  given  by  the  employee. 

While  this  form  of  accident  insurance  and  the  method  of  solicita- 
tion is  adaptable  to  any  form  of  industry,  it  has  been  written  par- 
ticularly among  railroad  employees,  and  it  is  interesting  to  note  this 
fact  in  its  historical  bearing,  for  as  accident  insurance  was  first 
written  to  afford  some  protection  against  the  hazards  of  railway  travel, 
so  the  necessity  for  this  form  of  protection  has  always  been  closely 
associated  with  that  class  of  dangers,  and  the  protection  of  railroad 
employees  has  been  developed,  both  by  stock  companies  and  by  mutual 
associations,  to  a  greater  extent  than  has  the  protection  of  the 
employees  of  any  other  line  of  industry. 


INDUSTRIAL  ACCIDENTS  35 

the  business  of  the  other  companies  is  conducted,  their  busi- 
ness practices  are  distinctive  in  that  they  cater  particularly 
to  the  business  of  workingmen  and  the  matter  of  premium 
payments  is  made  easier  and  more  convenient  for  their  policy- 
holders than  in  the  other  companies.  The  classification  of 
occupations  according  to  hazards  is  preserved,  but  instead  of 
graduating  the  premium  according  to  the  different  classi- 
fications the  premium  is  uniform  and  the  benefits  are  graded 
according  to  the  occupation  of  the  assured.  The  policy  may 
be  secured  by  the  pa;yTnent  of  a  policy  fee  and  the  first  in- 
stalment of  the  premium,  and  then  at  regular  intervals,  say 
monthly,  the  agent  calls  and  collects  the  subsequent  instal- 
ments ;  for  these  payments  the  assured  receives  certain  bene- 
fits in  cases  of  accidental  injury,  and  the  benefits  vary  in 
amount  according  to  the  hazards  of  the  occupation  in  which 
the  policyholder  is  engaged.  A  person  engaged  in  a  more 
hazardous  occupation  would  receive  less  than  a  person  en- 
gaged in  an  occupation  classified  as  less  hazardous. 

There  are  many  different  ways  in  which  accident  insur- 
ance protection  for  emplo^^ees  can  be  provided  by  the  joint 
action  of  employer  and  employee,  or  by  the  employer  alone. 
While,  of  course,  there  is  nothing  to  prevent  the  payment  of 
the  premium  by  the  employer  for  an  accident  policy  on  each 
individual  employee  this  practice  has  never  become  general, 
for  when  the  employer  pays  all  or  any  part  of  the  premium 
for  accident  insurance  for  his  employees  the  contract  is  usu- 
ally written  in  a  collective  form.  This  form,  which  is  known 
as  the  "workmen's  collective  policy,"  is  a  contract  made  be- 
tween the  insurance  company  and  the  employer  for  accident 
insurance  for  his  employees  as  a  whole,  the  premium  charged 
being  a  percentage  of  the  total  pay  of  the  employees  covered 
and  not  a  specific  charge  for  each  employee,  and  the  rate 
varying  according  to  the  occupational  hazards  of  the  differ- 


36  WOEKMEN'S  COMPENSATION" 

ent  lines  of  business  in  which  the  employer  is  engaged.  Con- 
tracts of  this  nature  are  written  to  cover  only  occupational 
accidents  or  both  occupational  accidents  and  accidents  which 
may  happen  to  employees  while  not  engaged  in  their  regular 
work.^ 

While  the  workmen's  collective  policy  is  a  contract  between 
the  employer  and  the  insurer,  and  the  employer  is  therefore 
responsible  for  the  premium,  there  is  nothing  to  prevent  the 
employer  by  agreement  with  his  employees  from  deducting 
a  proportional  part  from  the  pay  of  each  employee  for  this 
protection,  so  that  it  may  result  that  the  employees  them- 
selves are  paying  the  full  amount  of  the  premium,  the  insur- 
ance standing  in  the  name  of  the  employer  merely  as  a  matter 
of  convenience.     It  may  be,  however,  that  the  employer  de- 
ducts only  a  part  of  the  premium  from  the  pay  of  the  em- 
ployees and  pays  the  balance  himself,  or  that  he  pays  all  of 
the  premium  without  any  contribution  from  the  employees. 
The  policy  is  for  the  benefit  of  each  individual  employee,  and 
pays  specific  benefits  to  him  direct  when  he  is  disabled  by 
accidental   injuries   within   the   provisions   of  the  contract. 

1  This  distinction  in  the  underwriting  of  workmen's  collective  policies 
emphasises  the  fact  that  of  all  the  accidents  that  happen,  particularly 
to  insured  risks,  comparatively  few  arise  from  occupational  hazards. 
While  these  observations  about  accident  insurance  concern  the  subject 
especially  in  its  relation  to  the  industrial  accident,  the  fact  must  be 
considered  that  in  its  general  application  accident  underwriting  plays 
a  much  more  important  part  in  affording  protection  for  non-occupa- 
tional accidents  than  for  occupational  accidents.  The  claim  payments 
of  the  different  accident  companies  support  this  assertion,  for  it  may 
be  stated  that  of  the  claims  paid  by  companies  doing  a  general  class 
of  business  approximately  two-thirds  of  the  payments  are  for  non- 
occupational accidents  and  one-third  for  occupational  accidents.  This 
proportion  may  vary  in  different  companies,  particularly  between  the 
industrial  companies  and  those  which  do  no  business  on  the  industrial 
plan,  for  with  the  industrial  companies  the  proportion  of  claims  on 
account  of  injuries  sustained  in  occupational  accidents  is  necessarily 
larger  than  it  is  with  the  other  companies. 


INDUSTRIAL  ACCIDENTS  37 

The  effect,  therefore,  is  just  the  same  as  it  would  have  been 
had  a  separate  policy  been  issued  to  each  individual  em- 
ployee. 

In  considering  the  workmen's  collective  policy  it  should 
be  noted  that  as  a  matter  of  practice  the  policy  is  issued  only 
in  connection  with  a  policy  covering  the  legal  liability  of 
the  employer  for  injuries  to  his  employees.  It  is  an  adjunct 
of  liability  insurance  rather  than  an  independent  piece  of 
underwriting.  A  policy  of  this  nature  may  affect  the  ex- 
perience of  an  employer  under  his  liability  policy,  for  if  an 
injured  employee  receives  regailar  benefits  during  disability 
which  he  knows  that  the  employer  furnishes  in  whole  or  in 
part,  he  is  not  as  likely  to  make  claim  against  his  employer 
for  damages  as  he  would  be  were  he  in  receipt  of  no  benefits 
from  him.  In  recognition  of  this  some  reduction  in  the 
rate  charged  for  employer's  liability  insurance  is  usually 
allowed  when  a  concurrent  workmen's  collective  policy  is 
written. 

The  methods  in  which  accident  insurance  protection  is 
extended  to  workinginen  by  mutual  associations,  other  than 
accident  companies  which  do  business  on  the  mutual  plan, 
are  so  various  that  little  can  be  done  here  except  to  mention 
the  fact  of  such  protection  by  associations  of  this  nature. 
Two  general  divisions  might  be  made  in  attempting  to 
classify  these  associations,  and  that  would  be  by  dividing 
them  into  associations  connected  with  the  trade  or  business 
of  the  assured  and  those  which  have  no  connection  with  his 
trade  or  business.  Each  class  could  be  further  divided  into 
two  general  classifications.  The  trade  associations  may  be 
confined  to  one  particular  establishment  or  to  the  employees 
of  one  employer,  or  they  may  include  workmen  engaged  in 
a  particular  occupation  for  many  different  employers.  Those 
which  bear  no  relation  to  the  trade  could  be  divided  into  those 


208151 


38  WORKMEN'S  COMPENSATION 

which  do  business  on  a  fraternal  basis,  or  as  adjuncts  of 
fraternal  organisations,  and  those  which  are  conducted  on 
an  assessment  basis  without  any  fraternal  features. 

Many  employers,  particularly  the  railroads  and  other 
large  corporations,  have  encouraged  the  formation  of  benefit 
associations  among  their  employees  for  the  purpose  of  afford- 
ing financial  relief  in  cases  of  disability  however  caused, 
so  that  the  relief  afforded  is  not  confined  to  cases  of  acci- 
dental injury  but  may  also  include  disability  caused  by  sick- 
ness. The  premiums  or  assessments  which  support  theljene- 
fits  may  be  paid  by  the  employees  alone,  and  the  associations 
managed  by  them,  or  the  employer  may  contribute,  in  which 
case  he  usually  has  a  voice  in  the  management.^  The  asso- 
ciations which  include  persons  engaged  in  a  particular  occu- 
pation but  employed  by  different  employers  are  usually  or- 

1  An  interesting  ramification  of  this  practice  of  some  employers  of 
furnishing  accident  insurance  in  whole  or  in  part  for  their  employees 
is  the  effect  that  the  acceptance  of  such  benefits  may  have  on  the 
right  of  the  employee  to  recover  damages  from  his  employer  for 
accidental  injuries.  When  it  is  sho\vn  that  this  protection  has  been 
provided  wholly  at  the  expense  of  the  employees,  even  though  the 
employer  may  have  been  the  medium  through  whom  the  negotiations 
were  conducted  and  the  insurance  written  in  his  name,  this  question 
cannot  arise,  for  there  is  no  consideration  which  would  support  a 
waiver  of  the  legal  rights  of  the  employee,  but  when  tlie  employer  con- 
tributes to  or  supports  insurance  in  any  way,  either  in  regular  com- 
panies or  in  trade  benefit  associations,  there  is  a  consideration  to  sup- 
port such  a  waiver,  and  the  waiver  is  usually  required  as  a  condition 
precedent  to  the  acceptance  of  the  benefits. 

At  common  law  the  courts  generally  have  held  that  such  waivers 
are  valid,  and  have  allowed  them  to  be  established  in  bar  of  negligence 
actions  brought  by  injured  employees  who  had  previously  accepted  such 
benefits.  In  some  states  the  matter  has  been  regulated  by  statute,  the 
statutes  generally  providing  that  the  employer  is  relieved  only  to  the 
extent  of  the  proportion  of  his  contribution  to  the  benefit  funds. 
For  a  r6sum6  of  the  law  on  this  subject  see  pages  754-7S8,  Workmen's 
Insurance  and  Benefit  Funds  in  the  United  States,  (Twenty-third  Annual 
Report  of  the  Commissioner  of  Labor,  Washington,  1908)  and  pages 
146-149,  The  Law  of  the  Employment  of  Labor,  L.  D.  Clark. 


mCUSTKIAL  ACCIDEKTS  39 

ganised,  supported  and  managed  by  those  who  are  insured, 
the  employers  paying  no  part  of  the  premiiun,  and  conse- 
quently having  no  part  in  the  management. 

The  accident  insurance  feature  of  fraternal  orders  and 
the  assessment  organisations  which  are  carried  on  independ- 
ent of  any  trade  or  business  are  supported  w^holly  by  the 
members,  so  the  employers  of  employees  who  may  be  men- 
bers  have  no  interest  in  them,  but  they  are  of  inestimable 
value  to  their  members,  who  are  principally  wage  earners, 
in  times  of  misfortune  and  they  must  be  mentioned  in  con- 
nection with  the  institutions  which  serve  to  lighten  the  finan- 
cial burden  caused  by  industrial  accidents.  The  insurance 
feature  of  a  fraternal  order  or  insurance  which  is  written 
on  the  assessment  plan  may  not  be  conducted  on  a  scientific 
basis,  so  that  many  who  have  contributed  to  relieve  the  mis- 
fortunes of  others  may  find  themselves  without  protection 
from  these  sources  when  they  become  victims  of  similar  mis- 
fortunes, but  their  value  to  members  who  receive  benefits 
while  these  organisations  are  fulfilling  their  obligations  is 
real  so  reference  must  be  made  to  them  in  connection  with 
the  other  agencies  which  sem^e  to  mitigate  the  misfortunes 
of  the  industrial  accident,  but  this  reference  to  them  is  merely 
to  mention  their  existence  and  their  value  without  attempting 
to  outline  the  plans  on  which  any  of  these  organisations  are 
conducted. 

EEFEEENCES 

Work  Accidents  and  the  Law,  Crystal  Eastman. 

Industrial  Accidents,  I.  M.  Eubinow,  Social  Insurance,  Chapter 
IV. 

The  Causes  of  Industrial  Accidents,  I.  M.  Eubinow,  Social  In- 
surance, Chapter  V. 

Industrial  Accidents,  H.  E.  Seager,  Social  Insurance,  Chapter 
III. 


40  WORKMEN'S  COMPENSATIOJT 

The  American  Way  of  Distributing  Industrial  Accident  Losses, 
Crystal  Eastman,  American  Asociation  for  Labor  Legisla- 
tion, Second  Annual  Meeting,  page  43. 

"Employer's  Liability,"  A  Criticism  based  on  Facts,  Crystal 
Eastman. 

Liability  Insurance,  S.  C.  Dunham,  Yale  Insurance  Lectures, 
Fire  and  Miscellaneous,  page  226.     (1904.) 

The  Liability  Contract,  J.  E.  Rhodes,  2d.,  Liability  and  Com- 
pensation Lectures,  page  25. 

Genesis  of  Insurance  against  Accidents;  Definition  of  Accident; 
The  Principles  of  Accident  Insurance;  Alfred  Foot,  The 
Practice  of  Insurance  against  Accidents  and  Employer's 
Liability,  pages  7-23. 

Historical  Sketch,  S.  C.  Dunham,  Business  of  Insurance,  Volume 
II,  page  3. 

Accident  Insurance,  S.  C.  Dunham,  Yale  Insurance  Lectures, 
Fire  and  Miscellaneous,  page  204.     (1904.) 

The  Scope  of  Accident  Insurance,  J.  E.  Ehodes,  2d.,  Accident 
and  Healtli  Insurance,  page  10. 

The  History  and  Development  of  Accident  Insurance,  W.  C. 
Faxon,  Accident  and  Healtli  Insurance,  page  19. 

Accident  Underwriting,  B.  A.  Page,  Accident  and  Health  In- 
surance, page  30. 

Workmen's  Collective  Insurance,  C.  H.  Franklin,  Business  of 
Insurance,  Volume  II,  page  144. 

The  Origin  and  Development  of  Industrial  Health  and  Accident 
Insurance  in  America,  V.  D.  Cliff,  International  Association 
of  Accident  Underwriters,  1906,  page  66. 

Workmen's  Insurance  and  Benefit  Funds  in  the  United  States, 
Twenty-third  Annual  Eeport  of  the  Commissioner  of  Labor, 
Washington,  1908. 

Existing  Institutions,  F.  W.  Lewis,  State  Insurance,  Chapter  VI. 

Industrial  Insurance  in  the  United  States,  C.  R.  Henderson. 

Accident  Insurance  for  Workingmen,  Reul)en  McKitrick. 

Systems  of  Wage-earners'  Insurance,  F.  L.  Hoffman,  American 
Labor  Legislation  Review,  Volume  III,  page  213. 


CHAPTER  III 

EUROPEAN    BACKGROUND 

The  different  problems,  both  legal  and  economic,  raised  by 
the  industrial  accident  had  been  considered  in  Europe  long  be- 
fore the  agitation  in  the  United  States  had  crystallised  on  any 
programme  of  reform  in  our  system,  and  different  methods 
had  been  adopted  for  mitigating  the  misfortunes  which  it 
caused,  so  it  was  but  natural  that  those  who  were  interested 
in  the  subject  in  this  country  should  consider  the  solutions 
suggested  by  other  countries  when  attempting  any  change  in 
our  own  nation.  While  practically  all  of  the  nations  of 
Europe  had  adopted  some  system  of  compulsory  insurance 
for  workingmen,  or  some  other  system  for  their  compensa- 
tion in  cases  of  accidents  caused  by  the  hazards  of  industry 
which  was  a  radical  change  in  pre-existing  conditions,  prior 
to  the  close  of  the  nineteenth  century,  and  while  it  is  inter- 
esting and  instructive  to  note  all  of  the  different  systems 
which  have  been  adopted  in  the  civilised  nations,  it  is  with 
the  systems  of  two  nations,  Germany  and  England,  that  we 
are  particularly  concerned  when  we  study  the  European 
background  for  the  different  systems  which  have  already 
been  adopted  in  the  United  States,  for  those  two  systems 
have  received  more  study  on  the  part  of  our  economists, 
publicists  and  legislators  in  the  consideration  of  the  solution 
of  our  problems  than  have  the  systems  of  any  other  nations. 
Only  the  briefest  outline  of  the  basis  of  the  German  and 

41 


42  WORKMEN'S  COMPENSATION 

English  systems  can  be  given  here,  but  their  distinctive  fea- 
tures can  and  will  be  noted. 

The  general  distinction  in  the  origin  and  administration 
of  these  two  systems  should  be  noted  before  giving  any  out- 
line of  either  of  the  systems.  Superficially  speaking  it  may 
be  said  that  the  German  system  owes  its  origin  to  the  genius 
and  constructive  statesmanship  of  Bismarck,  who  forced  the 
legislation  through  in  order  to  stem  the  rising  tide  of  socialism 
in  Germany,  while  the  English  system  is  the  result  of  long 
popular  agitation  for  a  legal  change  which  was  necessitated 
by  previous  economic  and  social  changes.  In  their  admin- 
istrative features  the  differences  in  the  systems  are  also  radi- 
cal, for  the  German  system  is  a  strong  compulsory  insurance 
system,  while  the  English  system  simply  prescribes  the  ob- 
ligations of  the  employer  without  specifying  any  require- 
ments as  to  security  for  the  performance  of  the  obligations, 
and  it  does  not  provide  any  administrative  features  other 
than  court  procedure.  The  fundamental  differences,  in 
brief,  both  in  origin  and  administration  are  those  between 
an  autocratic  and  a  democratic  form  of  government. 

The  German  system  originated  as  a  comprehensive  social 
insurance  system,  and  although  the  whole  system  was  not 
enacted  and  put  into  operation  by  one  piece  of  legislation 
the  component  parts  of  the  system  were  all  established  within 
such  a  short  time  that  the  interval  between  the  enactment  of 
the  laws  creating  the  different  parts  which  together  consti- 
tute a  comprehensive  system  was  negligible,  for  the  whole 
reform  was  accomplished  inside  of  a  decade  by  masterly 
imperial  direction.  The  English  system,  on  the  contrary, 
is  the  result  of  long  popular  agitation  for  a  change  in  ex- 
isting conditions,  and  starting  as  a  limited  compensation 
law  for  certain  classes  of  industrial  accidents  it  was  extended 
to  cover  all  such  accidents  to  employees,  regardless  of  the  na- 


EUROPEAN  BACKGROUND  43 

tiire  of  the  occupation,  and  it  appears  to  be  expanding  into 
what  will  result  in  a  comprehensive  programme  of  social  in- 
surance, by  a  series  of  legislative  enactments  which  are  not 
in  terms  extensions  of  the  compensation  law  but  are  parts 
of  the  general  social  system  originated  by  the  adoption  of 
the  compensation  principle.  While,  therefore,  the  two  sys- 
tems may  possess  these  fundamental  and  basic  differences  in 
their  origin  and  development,  the  ends  which  they  seek  to 
accomplish  are  in  effect  identical. 

The  different  conceptions  of  the  attitude  of  the  state  to- 
wards the  citizen,  and  of  the  functions  of  the  state  in  gen- 
eral, are  the  factors  which  were  responsible  for  the  differ- 
ences in  the  origin  of  the  insurance  system  of  Germany  and 
that  of  the  compensation  system  of  England,  for  according 
to  the  German  conception  the  adoption  of  any  such  system, 
when  its  necessity  is  shown,  is  only  a  logical  and  legitimate 
extension  of  the  imperative  duty  of  the  state  to  further  the 
welfare  of  all  classes  by  the  necessary  legislation,  and  it 
could  be  justified  on  that  ground  alone,  while  the  adoption 
of  any  such  legislative  principle  in  England  involved  a  repu- 
diation of  the  individualistic  principles  of  the  common  law 
and  of  the  theoretical  basis  of  economics  as  recognised  by 
the  early  English  economists  who  had  such  a  large  influence 
in  shaping  the  doctrines  of  the  science  in  England.  Thus 
the  progress  towards  the  adoption  of  such  protective  prin- 
ciples for  any  one  class  was  necessarily  slower  in  England 
than  in  Germany,  for  in  the  one  nation  it  involved  the  repu- 
diation of  existing  and  settled  doctrines,  while  in  the  other 
it  was  only  the  extension  of  principles  already  recognised. 

The  logical  difference,  therefore,  in  the  origin  of  the  Ger- 
man svstem  and  the  Ena-lish  system  was  that  in  Germany 
the  system  _wasoriginated  and  virtually  forced  to  adopCTon" 
by  strong  imperial  authority,  while  in  England  its  adoption 


44  WORKMEN'S  COMPENSATION 

was  in  response  to  popular  demand.  In  Germany  the  genius 
and  insistence  of  Bismarck  was  responsible  for  the  formula- 
tion of  the  programme  of  social  insurance  which  was  adopted 
in  order  to  anticipate  the  demands  of  the  socialists  and  ap- 
pease any  elements  of  discontent  that  might  become  mani- 
fest among  the  working  people,  while  in  England  a  respon- 
sible ministry  representing  the  popular  will  first  demanded 
the  enactment  of  a  compensation  law  which  was  limited  in 
its  scope,  and  then  had  its  scope  extended  as  it  was  seen  that 
it  was  inequitable  to  attempt  to  differentiate  among  em- 
ployees and  give  the  benefit  of  this  protection  to  some  classes 
and  deny  it  to  others. 

While  upon  a  superficial  examination  it  may  appear  that 
the  adoption  of  the  social  insurance  system  of  Germany  may 
be  attributed  to  the  genius  and  constructive  statesmanship 
of  Bismarck,  a  deeper  study  of  the  subject  will  show  that 
for  many  years  forces  had  been  at  work  in  this  direction, 
that  the  adoption  of  the  system  was  a  consummation,  and 
that  the  work  of  Bismarck  was  that  of  direction  rather 
than  that  of  creation.  The  system  is  essentially  socialistic 
in  its  nature,  and  so  it  is  the  consummation  of  the  ideas 
of  the  socialists  whose  influence  has  been  so  strong  in  Ger- 
many. While  the  name  of  Karl  ]\Iarx  is  more  intimately 
associated  with  the  mention  of  German  socialism  than  that 
of  any  of  the  other  leaders,  many  of  the  ideas  which  con- 
stitute the  basis  of  the  socialistic  propaganda  are  those  of 
other  leaders,  and  this  idea  of  the  protection  of  individuals 
and  their  families  against  the  consequences  of  crushing  mis- 
fortunes is  attributed  to  LaSalle  rather  than  to  Karl  Marx. 
He  recognised  the  function  of  the  government  to  protect 
the  individual  against  force  and  fraud,  but  in  addition  to 
this  he  contended  that  it  was  the  function  and  the  duty  of 


EUKOPEAN  BACKGROUND  45 

government  to  protect  against  other  misfortunes  the  conse- 
quences of  which  might  be  just  as  real. 

The  legal  situation  in  Germany  in  its  relation  to  neg- 
ligence actions  between  employer  and  employee  prior  to  the 
adoption  of  the  social  insurance  system  was  much  the  same 
as  it  was  at  common  law  in  England  and  the  United  States. 
The  liability  of  the  employer  for  injuries  sustained  by  the 
employee  during  the  course  of  employment  was  predicated 
on  the  idea  of  fault  on  the  part  of  the  employer,  and  the  em- 
ployee could  not  recover  unless  he  could  show  the  fault  of 
the  employer.  The  situation  in  its  practical  aspect  prior  to 
the  establishment  of  the  German  Empire  was  much  the  same 
as  it  is  at  present  in  the  United  States,  for  each  separate 
kingdom  dealt  with  the  subject  in  its  own  way  and  no  uni- 
formity was  possible.  When  the  nation  became  united  at  the 
close  of  the  Franco-Prussian  war  the  situation  was  altered  in 
this  respect,  for  the  empire  assumed  jurisdiction  over  this 
subject  and  the  legislation  on  it  could  be  uniform  throughout 
the  empire. 

Prior  to  the  formation  of  the  empire  the  different  German 
states  had  enacted  considerable  legislation  regulating  the  re- 
lation of  employer  and  employee  which  was  of  a  protective 
nature  for  the  employee,  and  after  the  formation  of  the  em- 
pire, in  1871,  a  general  act  in  the  nature  of  an  Employers' 
Liability  Act  was  passed  which  was  applicable  to  the  nation 
as  a  whole,  but  this  law  was  limited  in  its  scope  and  un- 
satisfactory in  its  operation.  It  did  not  apply  to  all  classes 
of  employees  but  only  to  certain  classes,  and  as  liability  could 
be  established  only  when  negligence  was  shown  litigation  was 
often  necessary  in  order  to  secure  compensation,  so  it  was 
unsatisfactory  to  the  employees  to  whom  it  did  apply.  The 
uncertainty  astoliabjjjtymad^^  to  employers, 


46  WOKKMEN'S  COMPENSATION 

and  the  large  awards  made  when  liabilitj  was  established 
'ririiied  many  small  employers,  so  the  law  was  unsatisfactory 
to' the  employers  as  well  as  to  the  employees,  and  both  classes 
demanded  relief. 

'  The  different  states  which  compose  the  German  Empire  had 
encouraged  and  some  had  required  the  formation  of  societies 
to  insure  workmen  against  sickness  before  the  empire  was 
established,  and  some  of  the  organisations  which  were  per- 
fected in  accordance  with  either  the  authority  or  the  command 
of  the  state  had  also  included  insurance  against  accidents 
within  the  scope  of  their  operations.  After  the  establisliinent 
of  the  empire  and  before  the  adoption  of  the  com.pulsory  in- 
surance system  the  functions  of  such  societies  were  defined  by 
legislation,  which  legislation  also  fixed  the  rates  of  contribu- 
tions and  benefits,  and  provided  for  the  security  of  their 
funds.  These  societies  as  established  in  the  different  states 
provided  more  for  sickness  than  for  accidents,  and  the  societies 
authorised  by  the  empire  provided  for  sickness  alone,  so  they 
failed  to  provide  for  many  of  the  misfortunes  of  the  working 
classes,  and  by  the  time  that  the  adoption  of  the  compulsory 
insurance  system  was  proposed  it  had  been  sho^vn  that  the 
insurance  provided  by  the  ^'oluntary  associations  under  the 
authority  of  the  empire  was  insufficient  for  the  necessities  of 
the  time.  Nevertheless  the  establishment  of  these  societies 
was  a  valuable  precedent  for  the  action  which  was  taken. ^ 

The  political  influence  of  the  socialistic  party  extended 
rapidly  after  the  formation  of  the  empire,  and  the  increase 
in  the  number  of  socialistic  votes  in  the  Eeichstag  was  soon 

1  For  brief  and  comprehensive  accounts  of  the  conditions  in  Germany 
prior  to  the  adoption  of  the  compulsory  insurance  system  see  chapter 
I  in  Compulsory  Insurance  in  Oermany,  J.  G.  Brool<s;  pages  OSO-988, 
Workmen's  Insurance  and  Compensation  Systems  in  Europe;  and  chap- 
ter I,  Social  Insurance  in  Oermany,  W.  H.  Dawson. 


EUROPEAN  BACKGROUND  47 

noticeable.  With  the  inauguration  of  a  strong,  central  legis- 
lative body  the  socialists  had  a  better  opportunity  for  the 
spread  of  their  principles  and  the  display  of  their  activities 
than  they  had  had  in  the  individual  states,  and  with  the  spread 
of  their  propaganda  certain  evidences  of  social  unrest  became 
manifest,  so  that  Bismarck  appealed  to  the  Reichstag  for 
repressive  legislation  but  without  effect.  About  this  time  two 
unsuccessful  attempts  on  the  life  of  the  aged  Emperor  William 
I  caused  Bismarck  to  abandon  his  appeals  to  the  Reichstag 
and  appeal  directly  to  the  people  for  a  new  Diet  which  would 
be  responsive  to  his  wishes^,  and  the  people  granted  this  re- 
quest and  a  new  Reichstag  was  elected.  When  the  first  re- 
pressive legislation  was  enacted  by  this  body  it  carried  with 
it  a  promise  for  social  reforms,  as  a  result  of  which  the  first 
Accident  Insurance  Bill  was  introduced  in  the  Reichstag  in 
1881.  Thus  the  policy  of  attempted  repression  was  changed, 
and  for  it  was  substituted  a  well  defined  program  of  social 
reform  for  the  welfare  of  the  working  classes,  fostered  and 
forced  by  governmental  action. 

The  German  social  insurance  system  was  in  its  inception 
made  up  of  three  component  parts,  the  Sickness  Insurance 
system,  the  Accident  Insurance  system,  and  Insurance  against 
Old  Age  and  Invalidity.  Bismarck  first  introduced  the 
Accident  Insurance  Bill  in  the  Reichstag,  but  for  various 
reasons  his  attempt  to  have  this  enacted  as  the  first  piece  of 
legislation  in  the  establishment  of  the  system  was  abandoned 
and  the  Sickness  Insurance  system  was  the  first  to  be  estab- 
lished. This  law  was  passed  in  May  1882,  and  it  became 
effective  in  the  latter  part  of  1884.  The  reason  for  the  failure 
to  pass  the  Accident  Insurance  Bill  first  was,  in  brief,  that 
the  amendments  to  Bismarck's  different  proposals  were  un- 
satisfactory to  him  and  no  basis  of  agreement  was  reached, 
and  a  practical  consideration  which  may  have  contributed  to 


48  WORKMEN'S  COMPENSATION 

the  passage  of  the  Sickness  Insurance  Bill  was  the  fact  that 
sickness  insurance  was  already  more  general  than  any  other 
form  because  of  the  encouragement  which  the  different  Ger- 
man states  had  given  to  it  before  the  establishment  of  the 
empire,  and  also  the  sanction  which  the  empire  had  given  to 
sickness  insurance  by  the  legislation  passed  in  1876.  Another 
consideration  was  the  fact  that  in  the  Sickness  Insurance  Bill 
as  demanded  and  passed  the  employer  contributed  one-third 
of  the  funds  necessary  to  support  the  system  and  the  employees 
contributed  two-thirds,  so  that  the  burden  of  the  support  of 
the  system  was  on  the  employees.  The  Accident  Insurance 
Law  was  passed  in  1884,  and  became  operative  October  1, 
1885,  While  this  law  was  limited  by  its  terms  it  was  not 
so  restricted  but  what  it  extended  the  necessary  relief  to  a 
large  class  of  workmen,  and  by  subsequent  amendments  it 
was  made  practically  universal  in  its  application.  The  Act 
for  Insurance  against  Old  Age  and  Invalidity  was  approved 
June  28,  1889,  and  completed  the  trio  of  the  laws  which  con- 
stitute the  component  parts  of  the  social  insurance  system. 
These  laws  were  consolidated  and  codified,  and  extended  in 
their  scope,  by  the  Insurance  Consolidation  Act  of  1911. 

The  popular  conception  in  this  country  regarding  the  Ger- 
man Social  Insurance  System  is  that  it  is  a  state  insurance 
system,  but  this  conception  is  to  a  certain  extent  erroneous 
and  it  should  be  corrected.  With  the  exception  of  certain 
provisions  made  by  the  state  for  the  support  of  the  Old  Age 
and  Invalidity  pensions  established  by  law  the  government 
makes  no  contributions  to  the  insurance  funds.  The  system 
is,  rather,  a  compulsory  insurance  system,  for  the  law  re- 
quires that  the  payment  of  the  benefits  provided  by  the  differ- 
ent systems  shall  be  secured  in  some  specified  way.  The  plan 
was  to  recognise  and  utilise  existing  institutions  as  far  as 
possible,  and  to  authorise  the  formation  of  new  institutions 


EUHOPEAN  BACKGROUND  49 

where  no  existing  institutions  were  available  to  execute  the 
provisions  of  the  law,  so  that  the  system  did  not  usurp  the 
functions  of  any  of  the  existing  institutions  for  Sickness 
Insurance  but  extended  them,  and  where  any  institutions  were 
available  for  Accident  Insurance  they  were  also  utilised,  but 
where  no  such  institutions  were  available  it  was  necessary 
that  they  should  be  created.  Thus  the  law  simply  recognised 
the  principle  already  in  operation  and  compelled  its  extension 
to  situations  for  which  no  provisions  had  previously  been 
made. 

It  was  undoubtedly  easier  to  secure  the  passage  of  the  law 
providing  for  compulsory  Sickness  insurance  than  it  was  to 
secure  that  for  Accident  insurance  because  of  the  fact  that 
disability  caused  by  sickness  was  older  and  more  familiar  to 
every  one  than  that  caused  by  industrial  accidents,  and  in- 
surance against  this  form  of  disability  was  already  very  com- 
mon, so  that  the  application  of  the  principle  of  compulsory 
insurance  for  disability  caused  by  sickness  was  only  an  ex- 
tension of  a  practice  already  prevalent  by  voluntary  action. 
Another  factor  which  contributed  to  the  passage  of  this  law 
in  the  way  of  quieting  any  opposition  that  employers  may  have 
had  to  its  enactment,  was  the  provision  that  the  larger  share 
of  the  contributions  for  the  support  of  the  insurance  funds 
should  come  from  the  employees  themselves.  The  Accident 
Insurance  System,  however,  contemplated  that  the  whole  cost 
of  insurance  should  be  on  the  employers,  so  this  fact  together 
with  the  fact  that  the  system  was  a  radical  departure  in  prin- 
ciple from  the  existing  system  may  have  delayed  the  enact- 
ment of  the  law  providing  for  its  establishment. 

Although  the  Sickness  and  Accident  funds  were  established 
by  separate  legislative  enactments,  and  the  organisation  and 
administration  of  the  funds  are  separate,  yet  they  are  closely 
allied  in  their  administration  and  the  Sickness  funds  assume 


50  WORKMEN'S  COMPENSATION 

a  part  of  the  obligations  which  are  upon  the  Accident  funds 
in  other  countries.  The  administration  of  all  of  the  funds 
is  a  complicated  procedure,  because  of  the  mass  of  specific 
details  in  the  different  laws  and  also  because  of  the  minute 
supervision  exercised  by  the  German  government  over  the 
care  and  distribution  of  the  funds,  so  nothing  but  the  barest 
outline  as  to  their  administration  can  be  given  here,  and  that 
outline  will  be  confined  principally  to  the  nature  of  the  organi- 
sations which  administer  the  funds,  the  sources  of  the  con- 
tributions which  support  the  funds,  the  benefits  allowed,  and 
the  methods  of  administration. 

It  has  already  been  stated  that  the  German  law  made  use 
of  existing  institutions  as  far  as  possible  in  the  administration 
of  the  social  insurance  system,  requiring  that  the  benefits  paid 
by  the  different  funds  already  in  existence,  which  were  recog- 
nised as  mediums  through  which  the  new  system  could  be 
administered,  should  be  at  least  those  fixed  by  the  law.  The 
different  Sickness  funds  were  so  well  organised  and  estab- 
lished that  when  Sickness  insurance  was  made  compulsory 
the  existing  funds  were  so  adapted  to  carry  on  the  work  that 
the  establishment  of  only  two  new  funds  was  necessary.  The 
existino;  institutions  recognised  bv  the  law  were  the  miners' 
funds ;  the  factory  and  work  funds  ;  the  guild  funds  ;  and  two 
classes  of  mutual  funds,  those  registered  under  the  law  of 
1876  and  those  established  under  the  laws  of  the  various 
states.  The  new  organisations  were  the  local  funds,  of  which 
there  were  two  general  classes,  those  formed  for  special  trades 
or  for  various  trades  carried  on  in  the  same  locality,  and 
building  works  funds  formed  for  special  works  of  construc- 
tion where  exceptional  risks  were  incurred  and  where  the 
work  was  of  a  temporary  nature,  and  a  system  of  parochial 
insurance  under  which  the  local  authorities  were  required 


EUROPEAN  BACKGROUND  51 

to  insure  auj  persons  who  came  under  the  law  and  were  unable 
to  join  any  other  fund. 

Under  this  system  Sickness  insurance  was  furnished  by  a 
very  large  number  of  different  funds,  so  that  when  the  Insur- 
ance Consolidation  Act  of  1911  was  passed  one  of  the  pro- 
visions was  for  a  greater  centralisation  of  these  funds  with 
a  view  to  superseding  the  small  and  inefficient  funds.  Under 
this  law  two  groups  disappear  entirely,  the  building  trade 
funds  and  the  parochial  funds,  which  constituted  more  than 
one-third  of  all  of  the  funds  in  existence  in  1910,  and  two 
new  types  were  established.  The  funds  recognised  under  this 
law  were  the  general  local  funds ;  the  factory  and  work,  and 
guild  funds;  the  miners'  funds;  the  rural  funds;  and  the 
mutual  aid  funds. ^ 

The  inference  may  be  drawn  from  the  name  that  the  Sick- 
ness Insurance  System  provides  only  for  disability  caused  by 
sickness  as  distinguished  from  that  caused  by  accident,  and 
that  there  is  no  connection  between  this  system  and  the  Acci- 
dent Insurance  System,  but  this  is  wrong,  for  the  Sickness 
Insurance  System  is  the  basic  system  and  the  Accident  In- 
surance System  is  an  adjunct  of  it.  The  Sickness  system, 
in  the  first  instance,  provides  for  all  cases  of  disability,  how- 
ever caused,  whether  by  sicloiess  or  accident,  and  the  Acci- 
dent system  comes  into  operation  only  when  disability  caused 
by  accident  lasts  beyond  the  time  for  which  payment  from 
the  Sickness  system  is  provided. 

The  burden  of  the  support  of  the  Sickness  funds  is  on  the 
employees  themselves,  the  employers  contributing  one-third 
of  the  amount  necessary  and  the  employees  the  other  two- 
thirds.     The  minimum  benefits  in  cases  of  sickness  are  fifty 

1  See  pages  33-38,  liocial  Insurance  in  Germany,  W.  H.  Dawson,  for 
a  brief  description  of  the  various  Sickness  Insurance  Funds. 


52  WOKKMEN'S  COMPENSATION 

per-cent  of  wages  during  twenty-six  weeks  of  disability,  and 
in  addition  to  this  the  necessary  medicine  and  medical  at- 
tendance. In  cases  of  disability  caused  by  accident  the  in- 
jured receives  the  same  indemnity  from  the  Sickness  fund 
during  the  first  thirteen  weeks  of  disability,  and  from  the 
fifth  to  the  thirteenth  week,  inclusive,  an  additional  sixteen 
and  two-thirds  per-cent  paid  by  the  employer  in  whose  service 
the  accident  occurred ;  after  the  thirteenth  week  the  payments 
are  made  from  the  Accident  funds. 

The  larger  proportion  of  the  accidents  which  happen  to 
workmen  during  the  course  of  their  emplo^Tuent  involve  dis- 
ability of  thirteen  weeks  or  less,  so  that  the  greater  number 
of  injured  employees  are  compensated  from  funds  to  which 
they  themselves  have  contributed  the  major  part.  This  does 
not  mean  that  the  employees  bear  the  larger  share  of  the 
burden  of  Accident  Insurance,  for  in  the  serious  cases  the 
payments  for  the  disability  beyond  thirteen  weeks,  and  in 
fatal  cases  the  payments  to  the  dependents,  come  from  the 
Accident  funds,  and  these  payments  constitute  a  much  larger 
part  of  the  total  amount  paid  for  accident  indemnity  than 
that  which  comes  from  the  Sickness  funds. 

As  the  employees  bear  the  larger  share  of  the  contributions 
to  the  Sickness  funds,  they  have  a  proportionally  greater  part 
in  the  administration  of  the  funds.  The  general  administra- 
tion of  each  fund  is  carried  on  by  a  board  of  directors  and  a 
general  meeting.  The  directors  are  elected  by  the  general 
meeting,  which  in  the  small  funds  consists  of  all  of  the  adult 
members  but  in  the  large  funds  must  consist  of  delegates, 
the  employers  having  their  proportional  representation  in  the 
general  meeting  and  on  the  board  of  directors.  The  directors 
have  general  executive  authority.  Each  fund  is  also  subject 
to  the  jurisdiction  of  the  authorities  who  have  supervision  of 
the  conduct  of  the  business  of  insurance. 


EUEOPEAN  BACKGROUND  53 

When  the  disability  caused  by  accident  lasts  over  thirteen 
weeks  the  Sickness  fund  is  relieved  of  any  further  payment 
and  the  payment  for  the  additional  disability  comes  from  the 
Accident  fund  in  which  the  employer  of  the  injured  employee 
is  insured.  The  Accident  Insurance  System  is  a  non-con- 
tributory compensation  system,  for  the  employees  are  required 
to  bear  no  part  of  the  support  of  the  funds  from  which  the 
payments  are  made.  In  theory  this  system  is  a  limited  com- 
pensation system,  for  it  is  applicable  to  certain  specified 
trades  and  undertakings,  but  as  a  matter  of  fact  the  classifi- 
cations are  so  broad  and  inclusive  as  to  make  the  system 
practically  universal  in  its  application,  for  with  the  exception 
of  the  handicrafts  and  small  trades,  the  home  industries,  and 
commercial  undertakings,  all  wage  earners  engaged  in  indus- 
trial employments  are  included. 

The  compensation  paid  in  non-fatal  cases  is  two-thirds  of 
the  wages  of  the  injured,  during  the  period  of  total  disability ; 
during  partial  disability  the  payments  are  proportionally  less, 
being  graduated  as  near  as  possible  to  compensate  for  the 
impairment  in  earning  power  before  the  accident  and  after 
it.  In  addition  the  injured  is  entitled  to  receive  the  necessary 
medical  and  surgical  attention  at  the  expense  of  the  Accident 
fund.  In  fatal  cases  an  allowance  is  made  for  funeral  ex- 
penses, and  the  dependents  receive  a  pension  based  upon  a 
proportion  of  the  earnings  of  the  deceased,  subject  to  a  maxi- 
mum of  sixty  per-cent.  The  insurance  required  by  law  to 
meet  the  payments  is  furnished  by  mutual  associations  of 
employers.  Some  of  these  associations  include  only  those 
employers  engaged  in  the  same  trade,  while  others  may  in- 
clude all  employers  in  a  certain  area.  All  of  the  associations 
are  subject  to  the  supervision  exercised  by  the  government 
over  the  conduct  of  insurance.^ 

1  For  fuller  information  concerning  the  Accident  Insurance  System, 


54  WORKMEN'S  COMPENSATION^ 

The  adoption  of  the  workmen's  compensation  principle  in 
England  was  preceded  by  an  agitation  for  the  enactment  of 
different  forms  of  labour  legislation  which  had  been  in  pro- 
gress for  a  century,  or  practically  from  the  beginning  of  the 
industrial  stage,  for  as  soon  as  some  of  the  conditions  which 
were  incident  to  the  factory  system  became  noticeable,  and 
the  inability  of  the  workman  to  protect  himself  against  those 
conditions  became  apparent,  the  agitation  was  started  for 
legislation  to  remedy  those  conditions.  In  the  enactment  of 
the  different  forms  of  labour  legislation  in  England  the  laws 
regulating  the  working  conditions  of  the  employees,  which 
may  be  classed  under  the  heading  of  factory  legislation,  pre- 
ceded the  laws  which  relate  to  the  legal  liability  of  the  em- 
ployer for  accidents  to  the  employee  sustained  during  the 
course  of  employment.  The  labour  legislation  of  England 
during  the  nineteenth  century  did  not  follow  any  well  defined 
legislative  or  social  program,  but  each  enactment  was  aimed 
at  some  specific  evil  regardless  of  any  other  evils  that  might 
exist,  so  that  while  the  end  of  the  century  saw  a  well  regulated 
system  of  factory  legislation  and  the  adoption  of  a  system  of 
workmen's  compensation  this  legislation  had  its  inception 
piecemeal  and  in  an  exceedingly  haphazard  way. 

It  has  already  been  noted  that  the  fundamental  difference 
between  the  origin  of  the  German  system  and  of  the  English 
system  is  that  between  an  autocratic  and  a  democratic  form 
of  government.  The  force  of  this  observation  is  apparent 
when  the  origin  of  each  system  is  studied,  for  it  has  already 
been  seen  that  the  German  Social  Insurance  System  was 
formulated  and  adopted  as  a  well  defined  social  program,  in 

see  Chapter  IV,  Social  Insurance  in  Germany,  W.  H.  Dawson ;  pages 
89-115,  Workingmen's  Insurance  in  Europe,  L.  K.  Frankel  and  M.  M. 
Dawson;  and  pages  975-1176,  Workmen's  Insurance  and  Compensation 
Systems  of  Europe. 


EUROPEAN  BACKGROUND  55 

an  extension  of  the  recognised  function  of  the  state  to  further 
the  welfare  of  all  of  the  citizens.  The  English  Workmen's 
Compensation  Act  may  he  regarded  as  the  forerunner  of  a 
similar  system  in  England,  and  the  countries  whose  legal 
and  economic  systems  are  similar  to  that  of  England,  and 
while  the  results  accomplished  may  in  effect  be  practically 
identical  with  those  accomplished  in  Germany,  the  differences 
in  the  inception  and  in  the  basic  political  and  economic 
theories  in  the  two  countries  are  radical.  The  conditions, 
both  political  and  economic,  are  so  similar  in  England  and 
in  the  United  States  that  the  history  of  labour  legislation  in 
each  country  has  many  similar  features,  the  United  States 
following  England  in  many  of  the  legislative  experiments 
adopted  in  that  country. 

The  labour  legislation  passed  in  England  during  the  first 
eighty  years  of  the  nineteenth  century  had  little  or  no  bear- 
ing on  the  liability  of  the  employer  for  occupational  injuries 
sustained  by  his  employees;  its  principal  concern  was  with 
the  regTilation  of  working  conditions  and  hours  of  labour,  and 
with  the  regulation  of  labour  organisations.  The  rapid 
growth  of  the  factory  system  and  the  absolute  lack  of  any 
regulation  as  to  the  conditions  of  employment  or  of  working 
hours  soon  resulted  in  a  situation  for  which  legislative  relief 
was  demanded,  so  that  factory  legislation  had  its  inception 
early  in  the  nineteenth  century,  but  it  was  many  years  before 
the  proper  legislation  was  passed  with  the  necessary  provisions 
for  its  administration  and  enforcement  to  give  it  the  effect 
that  it  was  intended  that  it  should  have.  This  legislation 
was  directed  against  the  employment  of  young  children  in  the 
factories,  to  the  procurement  of  proper  living  conditions  for 
apprentices,  and  to  the  limitation  of  the  hours  of  labour  for 
women  and  children  employed  in  the  factories.  In  their  op- 
position to  this  legislation  the  employers  were  backed  by  the 


56  WORKMEN'S  COMPENSATION 

political  and  economic  theories  of  the  time,  based  on  the 
assumption  of  the  freedom  and  independence  of  all  individuals 
and  the  resulting  corollary  that  the  government  should  not 
interfere  in  the  management  and  control  of  private  affairs. 
An  absolute  repudiation  of  this  theory  was  necessary  before 
any  substantial  progress  could  be  made.  The  legislation  re- 
lating to  labour  organisations  is  a  phase  of  the  subject  that 
has  so  little  connection  with  that  relating  to  the  liability  of 
the  employer  for  injuries  sustained  by  the  employee  that  it 
is  mentioned  in  this  connection  simply  as  a  part  of  the  gen- 
eral subject,  and  without  any  description  or  comment.^ 

The  first  legislation  in  England  to  make  any  change  in  the 
common  law  of  employers'  liability  was  the  so-called  Em- 
ployers' Liability  Act  of  1880.  The  distinguishing  feature 
of  this  law  was  that  it  changed  the  fellow-servant  rule  bv 
establishing  a  legislative  recognition  of  the  vice-principal  rule, 
and  made  the  employer  liable  to  his  employee  for  injuries  sus- 
tained by  reason  of  the  negligence  of  an  employee  who  served 
the  employer  in  a  representative  capacity.  This  legislation 
was  preceded  by  several  years  of  agitation,  and  a  number  of 
different  bills  were  introduced  in  Parliament  in  the  mean- 
time the  purpose  of  which  was  either  to  abolish  or  modify 
the  doctrine  of  common  employment.  When  first  passed  the 
Employers'  Liability  Act  was  limited  in  its  operation  to  a 
term  of  seven  years,  but  it  was  subsequently  extended  from 
year  to  year  and  still  remains  in  force  except  as  superseded 
by  the  passage  of  the  Workmen's  Compensation  legislation. 

The  first  Workmen's  Compensation  Act  in  England  was 
passed  in  1897.  The  act  was  limited  in  its  scope,  and  al- 
though the  undertakings  to  which  it   applied  included  all 

1  See  A  Short  History  of  Labor  Legislation  in  Great  Britain,  A.  M. 
Low,  Bulletin  of  the  Bureau  of  Labor  (Washington),  Vol.  14,  pages 
534-578    (May,  1907). 


EUROPEAl^  BACKGROUE^D  57 

which  might  be  classified  as  "hazardous,"  and  it  was  doubt- 
less the  intention  of  the  framers  to  distinguish  in  a  general 
way  between  hazardous  and  non-hazardous  occupations,  no 
such  specific  distinction  appears  in  the  law.  The  act  was 
amended  in  1900  so  as  to  include  agricultural  operations,  and 
it  was  amended  and  re-enacted  in  1906  so  as  to  make  its  appli- 
cation practically  universal. 

The  law  applies  to  "personal  injury  by  accident  arising  out 
of  and  in  the  course  of  the  employment"  of  a  workman,  and 
in  addition  to  this  coverage  a  schedule  of  occupational 
diseases  is  included  in  the  act  naming  a  number  of  different 
diseases  and  the  processes  in  which  they  occur,  and  it  is 
specified  that  those  diseases  if  contracted  in  the  processes 
named  shall  be  included  in  the  coverage  of  the  act.  The  law 
also  provides  that  the  Secretary  of  State  may  make  orders  ex- 
tending the  scope  of  the  act  so  as  to  cover  other  diseases  and 
processes,  and  the  coverage  has  been  considerably  extended 
by  the  exercise  of  this  authority. 

A  loophole  of  considerable  size  is  left  in  the  law  by  the 
provision  allowing  the  employee  to  elect  his  remedy  in  case 
of  an  injury  caused  by  the  "personal  negligence  or  wilful 
act  of  the  employer  or  of  some  person  for  whose  act  or  default 
the  employer  is  responsible."  By  virtue  of  this  provision 
the  injured  employee  has  his  common  law  rights  presei^ed 
in  cases  of  injuries  caused  by  the  "personal  negligence  or 
wilful  act"  of  the  employer  himself,  and  his  rights  against 
the  employer  under  the  Employers'  Liability  Act  for  injuries 
caused  under  the  same  circumstances  by  a  personal  repre- 
sentative of  the  employer.  The  employee  must  elect,  in  all 
such  cases,  either  to  take  his  compensation  or  to  proceed  in- 
dependently of  the  act,  but  if  his  common  law  action  fails 
the  court  may  allow  him  compensation  under  the  act  subject 
to  a  deduction  for  costs  in  the  unsuccessful  suit. 


68  WOEKMEN'S  COMPENSATION 

As  the  employee  has  his  rights  as  they  were  before  the 
passage  of  the  act  in  cases  of  wilful  negligence  on  the  part 
of  the  employer  or  of  any  one  representing  him,  so  the  em- 
ployer is  exempt  from  liability  under  the  act  in  case  of  injury 
caused  by  the  "serious  and  wilful  misconduct"  of  the  em- 
ployee, unless  the  injury  result  in  death  or  serious  and  perma- 
nent disablement.  It  may  be  said,  however,  that  the  attempts 
on  the  part  of  injured  employees  to  hold  their  employers 
under  the  common  law  because  of  this  reservation  in  the 
compensation  law  are  relatively  few,  and  in  return  the 
attempts  on  the  part  of  employers  to  deprive  employees  of 
the  benefits  of  compensation  because  of  alleged  serious  and 
wilful  misconduct  are  rare. 

The  indemnity  provided  in  non-fatal  cases  is  a  weekly  pay- 
ment during  incapacity  not  exceeding  fifty  per  cent,  of  the 
average  weekly  wages  of  the  injured,  the  amount  not  to  exceed 
one  pound  ($4.87)  a  week.  This  is  subject  to  some  variation 
in  cases  of  partial  incapacity,  and  in  the  case  of  an  injured 
minor  whose  wages  do  not  amount  to  a  pound  a  week.  In 
fatal  cases  if  no  dependents  survive  the  payment  is  confined 
to  reasonable  expenses  of  medical  attendance  and  burial,  not 
to  exceed  ten  pounds.  In  cases  of  total  dependency  the  pay- 
ment is  a  sum  equal  to  three  years'  earnings  of  the  deceased, 
but  not  less  than  one  hundred  and  fifty  pounds  and  not  exceed- 
ing three  hundred  pounds.  If  the  dependents  are  only 
partially  dependent  the  amount  to  be  paid  must  be  fixed  by 
agreement  or  arbitration,  but  it  cannot  exceed  the  amount 
allowed  for  total  dependency. 

The  matter  of  the  insurance  of  the  compensation  obligation 
under  the  English  act  is  wholly  optional  with  the  employer, 
for  the  law  makes  no  provision  regarding  the  security  of  the 
payments  other  than  to  class  compensation  claims  among  the 
preferred  claims  in  case  of  the  bankruptcy  of  the  employer. 


EUROPEAN  BACKGROUND  59 

The  spirit  of  the  workmen's  compensation  principle,  however, 
encourages  the  security  of  the  payments  of  the  obligations 
by  some  form  of  insurance,  and  several  different  under- 
writing institutions  were  already  in  existence  which  could 
be  immediately  utilised  for  that  purpose.  The  law,  in  fact, 
recognised  the  '^friendly  societies"  which  had  been  in  existence 
for  several  centuries,  and  provided  that  substitute  schemes  of 
compensation  might  be  allowed  under  the  act  when  the  reg- 
istrar of  friendly  societies,  after  examination,  certified  that 
the  scheme  was  not  less  beneficial  to  the  workman  than  the 
allowances  of  the  Compensation  Act.  This  meant  that  the 
employers  and  employees  could  unite  in  forming  insurance 
associations,  or  that  they  could  join  those  already  in  operation, 
the  employers  paying  a  sufficient  part  of  the  premium  to 
secure  the  pa;>Tnent  of  the  compensation  obligation  and  the 
employees  contributing  any  premium  that  might  be  agreed 
upon  in  order  to  secure  larger  indemnity  than  that  allowed 
by  the  act.  The  employer  was  then  liable  only  in  accordance 
with  the  provisions  of  the  substitute  scheme.  Liability 
underwriting  had  been  started  in  England  shortly  after  the 
passage  of  the  Employers'  Liability  Act,  and  the  liability  com- 
panies were  prepared  to  insure  the  obligations  imposed  by 
the  Compensation  Act  the  same  as  they  had  covered  the  com- 
mon law  obligations.  The  workmen  were  protected  in  case 
of  bankruptcy  of  an  assured  employer,  for  the  rights  of  an 
employer  against  the  insurer  in  such  a  case  were  vested  in 
them  by  the  law,  and  the  insurer  was,  therefore,  directly 
liable  to  them. 

Nearly  all  of  the  compensation  insurance  in  England  is 
carried  in  stock  companies.  Insurance  under  substitute 
schemes  by  joint  action  of  employers  and  employees  has  not 
been  very  successful  or  popular,  and  only  a  small  volume  of 
such  insurance  is  in  force.     The  development  of  accident 


60  WORKMEN'S  COMPENSATION 

insurance  in  friendly  societies  connected  with  the  different 
industrial  establishments  has  evidently  been  impeded  by  the 
belief  on  the  part  of  the  workmen  that  this  might  break  down 
the  power  of  the  trade  unions,  and  those  societies  are  now 
on  the  decline.  The  supervision  of  the  stock  companies  is 
not  as  strict  in  England  as  it  is  in  many  other  countries,  but 
they  are  supposed  to  carry  sufficient  reserves  to  meet  all  of 
their  liabilities,  and  it  may  be  said  that  their  assumption  of 
the  obligations  imposed  by  the  compensation  law  has  been 
satisfactory. 

The  act  provides  for  no  special  administrative  machinery 
in  the  way  of  officials  whose  particular  duty  it  is  to  administer 
the  pro\dsions  of  the  law,  but  it  is  the  intention  of  the  law 
that  disputes  shall  be  settled  by  arbitration,  for  it  is  provided 
in  the  law  that  disputes  arising  under  it  shall  be  submitted 
to  arbitration  if  any  committee  representative  of  the  employer 
and  employees  exists  with  power  to  settle  matters  under  the 
act,  or  that  if  either  party  objects,  or  no  such  committee 
exists,  or  the  committee  which  exists  fails  to  settle  the  dis- 
pute within  six  months  from  the  date  of  the  claim,  the  matter 
shall  be  settled  by  a  single  arbitrator  agreed  upon  by  the 
parties,  or  in  the  absence  of  agreement  by  the  judge  of  the 
county  court.  It  is  also  provided  that  in  England  with  the 
authority  of  the  lord  chancellor  the  matter  may  be  settled 
by  an  arbitrator  appointed  by  the  judge  of  the  county  court, 
which  arbitrator  for  this  purpose  shall  have  all  of  the  powers 
of  the  judge.  The  committee  or  the  arbitrator  may,  if  they 
or  he  see  fit,  submit  any  question  of  law  to  the  judge  of  the 
county  court  for  his  decision,  and  the  decision  of  the  judge 
either  on  this  submission  or  in  cases  where  he  himself  settles 
the  whole  question  is  final  unless  appeal  is  taken  as  provided 
in  the  act. 

It  will  be  seen,  therefore,  that  it  is  the  intention  of  the  law 


EUKOPEAN  BACKGROUND  61 

to  have  the  matter  of  its  administration  vested  in  the  parties 
or  their  representatives,  and  to  avoid  litigation  as  far  as 
possible.  However,  it  is  impossible  to  wholly  eliminate  liti- 
gation as  long  as  there  is  any  basis  for  a  difference  of  opinion 
among  men  as  to  the  meaning  of  a  law,  so  there  have  been 
many  recorded  decisions  in  England  as  to  the  construction 
of  the  compensation  law,  and  this  collection  of  decisions  has 
constituted  about  the  only  body  of  precedents  that  the  courts 
in  the  United  States  have  had  when  questions  involving  the 
construction  of  our  laws  were  before  them  for  decision  and 
they  were  looking  for  precedents  for  their  guidance. 

EEFEEENCES 

Workmen's  Insurance  and  Compensation  Systems  of  Europe, 
Twenty-fourth  Annual  Report  of  the  Commissioner  of 
Labor,  Washington,  1909. 

Workingmen's  Insurance  in  Europe,  L.  K.  Frankel  and  M.  M. 
Dawson. 

Workmen's  Compensation  in  Europe,  M.  M.  Dawson,  Liability 
and  Compensation  Lectures,  page  77. 

Workmen's  Compensation  Laws  of  Foreign  Countries,  C.  H.  Ver- 
rill.  Bulletin  of  the  Bureau  of  Labor  Statistics  (U.  S.),  No. 
136,  page  131. 

Organization  of  Accident  Insurance,  I.  M.  Eubinow,  Social  In- 
surance, Chapter  IX. 

Certain  Aspects  of  Insurance  under  the  Foreign  Compensation 
I^ws,  P.  T.  Sherman,  Bureau  of  Publicity,  Hartford,  1913. 

Compulsory  Insurance  in  Germany,  J.  G.  Brooks,  Fourth  Special 
Eeport  of  the  Commisioner  of  Labor,  Washington,  1893. 

Social  Insurance  in  Germany,  W.  H.  Dawson. 

The  Practical  Eesults  of  Workmen's  Insurance  in  Germany,  Dr. 
Ferdinand  Friedensburg,  New  York,  1911. 

A  Eeply  to  Dr.  Friedensburg,  E.  T.  Brodsky,  The  Survey,  Vol- 
ume XXVIII,  page  333.     (May  4,  1913.) 


62  WORKMEN'S  COMPENSATION 

Workmen's  Accident  Insurance  in  Germany,  H.  G.  Villard. 

British  Workmen's  Compensation  Acts,  Lanncelot  Packer,  Bul- 
letin of  the  Bureau  of  Labor  (Washington),  Volume  XIY, 
page  579.     (May,  1907.) 


CHAPTER  IV 

THE    AGITATION    IN    THE    UNITE©    STATES 

I 

The  adoption  of  the  workmen's  compensation  principle  in 
the  United  States  was  preceded  by  many  statutory  changes 
in  the  common  law  relating  to  labour  conditions,  of  which 
legislation  relating  to  employers'  liability  was  a  part.  This 
legislation  is  comprehended  under  the  general  classification 
of  labour  legislation,  and  it  includes  in  its  scope  all  matters 
relating  to  labour  in  which  statutory  regulation  was  necessary, 
either  to  declare  the  well  established  principles  of  the  com- 
mon law  or  to  modify  or  abolish  common  law  rules.  The 
greater  part  of  the  legislation,  however,  has  been  necessitated 
by  the  defects  of  the  common  law,  so  the  purpose  of  the  bulk 
of  this  legislation  has  been  either  to  modify  or  abolish  com- 
mon law  doctrines. 

Before  the  principle  of  workmen's  compensation  was 
evolved  and  the  idea  adopted  in  any  country,  the  attempts 
that  were  made  to  mitigate  the  conditions  of  the  employee 
in  relation  to  his  right  to  recover  against  his  employer  for 
occupational  injuries  were  by  the  enactment  of  legislation 
which  either  prescribed  standards  for  the  conduct  of  the  em- 
ployer in  cases  where  the  standards  fixed  by  the  common  law 
were  uncertain  or  indefinite,  or  modified  or  abolished  the 
rules  of  the  common  law  in  situations  in  which  such  action 
seemed  necessary.  As  the  injustice  of  the  common  law  sys- 
tem of  employers'  liability  became  more  and  more  apparent 
it  was  but  natural  that  the  attempt  should  be  made  to  modify 

63 


64  WOKKMEN'S  COMPENSATION 

it  by  statute  so  that  the  rights  of  the  employee  would  be  en- 
larged, and  the  statutory  enactments  which  were  passed  ^were 
accompanied  by  a  change  in  public  opinion  in  this  matter 
which  manifested  itself  in  a  change  in  the  attitude  of  the 
courts  in  the  application  of  the  common  law  in  employers' 
liability  cases,  and  allowed  an  injured  employee  to  recover 
under  the  common  law  in  many  cases  in  which  recovery  had 
previously  been  disallowed  in  similar  cases.  A  brief  review 
of  these  statutory  changes  is  an  essential  element  of  any  study 
of  the  subject  of  workmen's  compensation,  for  they  constitute 
an  important  part  of  the  movement  which  resulted  in  the 
repudiation  of  the  common  law  system  of  employers'  liability 
and  the  substitution  for  it  of  the  system  of  workmen's  com- 
pensation. 

The  fundamental  difficulty  which  has  confronted  labour 
legislation  in  the  United  States  is  the  constitutional  difficulty, 
and  this  situation  appears  in  two  different  phases,  one  of 
which  is  more  practical  than  theoretical,  while  the  other  re- 
lates wholly  to  constitutional  theory.  The  practical  difficulty 
has  prevented  uniformity  in  our  legislation,  while  the  diffi- 
culty which  has  its  basis  in  our  constitutional  theory  has  gone 
to  the  root  of  the  subject  and  has  prevented  the  passage  and 
execution  of  legislative  enactments  unless  it  could  be  shown 
to  the  legislatures  and  then  to  the  courts  that  such  legislation 
was  not  in  conflict  with  any  of  the  constitutional  provisions 
guarding  personal  and  property  rights. 

The  practical  phase  of  the  situation  arises  from  our  sys- 
tem of  government,  in  that  the  different  states  have  general 
governmental  powers  except  as  specific  powers  have  been 
granted  to  the  federal  government,  and  the  federal  govern- 
ment possesses  only  those  powers  which  have  been  specifically 
delegated  to  it  bv  the  several  states.  In  this  delegation 
of  authority  the  states  have  retained  control  of  practically 


AGITATION  m  THE  UNITED  STATES       65 

all  matters  of  domestic  concern,  and  the  regulation  of  in- 
dustry is  one  of  those  matters  which  was  not  delegated,  so 
that  while  the  problem  of  labour  legislation  is  one  which  is 
national  in  its  scope,  because  of  the  artificiality  and  virtual 
elimination  of  the  boundary  lines  between  the  different  states, 
it  is  local  in  its  solution.  As  no  state  has  any  authority  to 
pass  legislation  which  will  be  effective  beyond  its  own 
borders,  and  as  the  legislators  in  the  different  states  have 
different  ideas  as  to  the  nature  of  labour  legislation,  the 
practical  result  of  our  system  has  been  a  tremendous  mass  of 
labour  legislation  in  the  aggTegate,  and  a  great  diversity  as  to 
its  nature  and  administration  in  the  different  states,^ 

The  theoretical  difficulty  is  based  mainly  on  the  propo- 
sition that  labour  legislation  necessarily  favours  a  certain 
class  as  against  other  classes,  and  is,  therefore,  on  general 
principles,  a  violation  of  the  constitutional  provisions  which 
^guarantee  equal  protection  of  the  laws  and  equal  personal 
rights  to  lilT, "unless  some  justification  can  be  found  for  this 
discrimination.  From  the  beginning  of  labour  legislation 
the  principle  has  been  dimly  recognised  that  the  inequality 
of  bargaining  power  between  employer  and  employee  was  a 
sufficient  necessity  for  this  form  of  legislation,  but  the  con- 
stitutional prohibitions  against  class  legislation  were  sufficient 
to  raise  reasonable  doubts  as  to  the  validity  of  many  suggested 

1  The  immensity  of  the  amount  of  labour  legislation  in  the  United 
States  maj'  be  appreciated  by  the  statement  that  tlie  labour  laws  in 
force  at  the  end  of  1913  were  published  by  the  Bureau  of  Labor  Sta- 
tistics, Department  of  Labor,  Washington,  in  two  volumes  of  nearly 
twenty-five  hundred  printed  pages.  Bulletin  No.  IJfS.  This  compila- 
tion did  not  include  the  compensation  laws,  for  they  were  published 
separately.  Bulletin  No.  126.  the  enactments  of  1914  were  printed 
in  a  volume  of  nearly  three  hundred  pages.  Bulletin  No.  166,  and  those 
of  1915  in  a  volume  of  nearly  five  hundred  pages.  Bulletin  No.  186. 
Tliese  two  bulletins  included  the  compensation  legislation  of  those  years. 
That  legislation  was  also  published  separately,  in  Bulletin  No.  185. 


66  WOEKMEN'S  COMPENSATION 

enactments,  so  that  it  was  not  nntil  the  courts  passed  from 
the  theoretical  doctrines  of  class  legislation  to  those  of  reason- 
able classification  that  the  way  was  clearly  open  for  the  neces- 
sary legislative  relief.^ 

Because  of  the  great  volume  of  labour  legislation  in  the 

1  The  case  of  Holden  v.  Hardy,  169  U.  S.  366,  decided  by  the  Supreme 
Court  of  the  United  States  in  1898,  may  be  regarded  as  a  landmark 
in  the  establishment  of  the  principle  of  reasonable  classification  as 
distinguished  from  class  legislation.  While  the  matter  of  labour  legis- 
lation is  essentially  one  of  state  control,  when  it  comes  to  a  determina- 
tion as  to  whether  or  not  such  legislation  is  constitutional  the  final 
decision  may  rest  with  the  federal  courts,  for  the  Bill  of  Rights 
annexed  by  amendment  to  the  Constitution  of  the  United  States  guar- 
antees certain  rights  to  citizens  of  the  United  States,  and  the  Fourteenth 
Amendment  further  provides  that  "no  State  shall  make  or  enforce 
any  laws  which  shall  abridge  the  privileges  or  immunities  of  citizens 
of  the  United  States."  By  virtue  oi  this  provision  it  is  necessary  for 
the  federal  courts  to  pass  upon  any  alleged  violation  by  a  state  of 
the  privileges  or  immunities  of  citizens  of  the  United  States. 

In  this  case  the  constitutionality  of  a  Utah  statute  prohibiting 
employment  in  underground  mines  and  in  smelters  for  more  than  eight 
hours  a  day,  except  in  cases  of  emergency  where  life  or  property  was 
in  imminent  danger,  was  attacked.  This  law  was  passed  by  virtue 
of  a  provision  in  the  Constitution  of  Utah  that  "the  legislature  shall 
pass  laws  to  provide  for  the  health  and  safety  of  employees  in  fac- 
tories, smelters,  and  mines,"  and  the  Supreme  Court  of  Utah  was  of 
opinion  that  if  the  legislature  needed  any  authority  to  pass  the 
statute  it  was  found  under  this  constitutional  provision.  It  was 
claimed,  however,  that  the  statute  was  unconstitutional  because  of  the 
provisions  of  the  Fourteenth  Amendment  to  the  Constitution  of  the 
United  States. 

The  judgment  of  the  Supreme  Court  of  Utah  was  affirmed,  the  court 
holding  that  the  question  for  determination  in  cases  where  class  legis- 
lation was  alleged  was  whether  or  not  the  legislature  had  adopted  the 
statute  in  the  exercise  of  a  reasonable  discretion,  or  whether  its  action 
was  only  an  excuse  for  an  unjust  discrimination  or  the  oppression,  or 
spoliation,  of  a  particular  class.  A  distinction  exists  between  these 
different  attitudes  on  the  part  of  a  law-making  body,  and  legislation 
based  on  reasonable  discretion  is  valid  while  that  based  on  class 
oppression  is  invalid.  The  Utah  statute  was  based  on  the  principle 
of  reasonable  discretion,  so  its  validity  was  upheld. 


AGITATION  IN  THE  UNITED  STATES       67 

United  States,  each  state  having  its  own  labour  laws  which 
may  be  peculiar,  particularly  in  detail  and  administration, 
to  the  state  itself,  it  is  impossible  to  do  any  more  in  this 
summary  than  give  a  brief  outline  of  the  principles  of  this 
legislation,  and  this  outline  will  necessarily  be  confined  to 
that  part  of  labour  legislation  which  relates  to  employers' 
liability.  This  particular  part  may  be  divided  into  three 
different  sub-divisions,  and  although  each  sub-division  may 
run  into  each  of  the  others  there  is  enough  distinction  between 
them  to  justify  the  classification.  The  sub-divisions  are: 
(1)  laws  relating  to  the  safety  and  health  of  employees;  (2) 
laws  regulating  the  employment  of  women  and  children ;  and 
(3)  a  certain  class  of  statutes  which,  appropriating  the  name 
of  the  subject  itself,  have  gone  under  the  name  "employers' 
liability"  acts. 

The  purpose  of  laws  relating  to  the  safety  and  health  of 
employees  is  to  regulate  the  working  conditions  of  all  classes 
of  employees  as  distinguished  from  any  particular  class. 
The  necessity  for  this  legislation  arises  from  the  generality 
of  the  rules  of  the  common  law  regarding  the  duty  of  the 
employer  to  his  employees,  and  the  general  purpose  of  it  is 
to  protect  the  health  and  morals  of  the  employees  as  well  as 
their  physical  safety.  The  common  law  requires  that  the 
employer  shall  furnish  his  employee  with  a  safe  and  suitable 
place  in  which  to  do  his  work,  but  as  this  system  is  simply 
an  unwritten  code  of  general  principles  it  cannot  define  spe- 
cifically just  what  constitutes  the  "safe  and  suitable  place" 
which  it  requires.  The  requirements  of  the  different  laws 
relating  to  safety  and  health  are  intended  to  supplement  the 
generalities  of  the  common  law  and  specify  what  constitutes 
a  safe  and  suitable  place  under  the  different  conditions  of 
industry.  When  failure  to  comply  with  these  requirements 
is  shown  it  appears  that  the  employer  has  not  observed  the 


G8  WORKMEN'S  COMPENSATION 

standards  fixed  by  the  positive  provisions  of  the  law  for  his 
conduct,  and  if  injury  results  to  an  employee  by  reason  of 
such  a  failure  on  the  part  of  the  employer  the  right  of  the 
employee  to  recover  damages  for  his  injury  is  virtually  estab- 
lished. 

The  laws  regulating  hours  of  labour,  whether  applicable 
to  any  particular  employment  or  applicable  to  all  employ- 
ments, are  an  essential  part  of  the  laws  relating  to  safety  and 
health,  for  it  is  recognised  that  excessive  working  hours  will 
eventually  undermine  the  constitution  of  any  working  man, 
and  not  only  this  but  the  relation  between  fatigue  and  in- 
dustrial accidents  is  intimate,  for  a  tired  workman  is  not  as 
well  able  to  protect  himself  as  one  who  is  not  so  affected,  so 
in  the  interest  of  the  conservation  of  the  health  and  even  the 
lives  of  workmen  laws  of  this  nature  are  recognised  as  a  valid 
exercise  of  legislative  discretion. 

The  varying  conditions  of  industry  demand  different  laws 
for  different  classes  of  employments,  so  the  laws  relating  to 
safety  and  health  are  divided  into  several  different  classes. 
The  principal  classes  are  the  laws  relating  to  factories,  those 
relating  to  mining  and  underground  work  generally,  and  those 
which  relate  to  transportation.  While  all  of  these  statutes 
have  a  direct  effect  on  the  liability  of  the  employer  for  in- 
juries sustained  by  his  employees  during  the  course  of  their 
employment,  in  that  they  fix  the  standards  with  which  the 
employer  must  comply  and  a  failure  to  observe  these  standards 
is,  therefore,  a  violation  of  the  law  and  by  implication  makes 
the  employer  liable  to  an  employee  who  may  have  sustained 
injuries  by  reason  of  the  failure  of  the  employer  to  comply 
with  the  standards  fixed  by  the  statutes,  the  purpose  of  this 
legislation  is  not  primarily  to  fix  a  liability  on  the  employer 
but  to  conserve  the  life  and  health  of  the  employee.  The 
prevention  of  injuries  rather  than  the  establishment  of  a  right 


AGITATIOi^  m  THE  UNITED  STATES        69 

to  receive  compensation  after  injuries  have  been  received  is 
the  object  which  these  statutes  seek  to  accomplish. 

In  the  provisions  which  attempt  to  conserve  the  physical 
condition  of  employees  by  preventing  accidents  the  factory 
acts  prescribe  specific  safeguards  for  dangerous  conditions 
under  which  an  employee  may  be  required  to  work,  and  they 
also  prescribe  certain  precautions  for  generally  dangerous 
conditions  to  which  all  employees  may  be  exposed  regardless 
of  the  particular  part  of  the  work  which  they  are  doing.  The 
statutes  requiring  specific  safeguards  relate  particularly  to 
the  guarding  of  machinery  so  that  the  dangers  of  being  in- 
jured by  contact  with  it  will  be  reduced  to  a  minimum. 
The  usual  requirements  of  these  statutes  are  that  all  exposed 
gears  shall  be  guarded;  that  mechanism  for  the  transmission 
of  power,  such  as  belting  and  shafting,  shall  be  guarded; 
and  that  saws,  mangles,  emery  wheels,  and  all  moving  and 
dangerous  machinery  shall  be  securely  guarded,  or  if  this 
is  impossible  that  notice  of  the  danger  shall  be  conspicuously 
posted.  It  is  also  usually  provided  that  shafting  shall  be 
provided  with  tight  and  loose  pulleys,  in  order  that  the  ma- 
chinery may  bo  stopped  immediately  in  cases  of  emergency. 
The  statutes  regulating  general  conditions  usually  provide 
that  stair  openings  and  entrances  to  elevator  shafts  must  be 
sufficiently  guarded,  that  hand  rails  shall  be  placed  on  stairs, 
that  openings  in  floors  must  be  guarded,  and  in  general  that 
the  dangers  from  all  such  conditions  shall  be  eliminated  as 
far  as  possible.  One  element  of  this  phase  of  the  subject  is 
the  inspection  of  steam  boilers  which  some  states  require,  for 
the  hazard  of  boiler  explosions  is  one  to  which  many  em- 
ployees, besides  those  who  work  around  the  boilers,  are  ex- 
posed. Another  element  is  that  of  protection  against  fire, 
which  is  a  recent  development  along  this  line.  This  began 
by  first  requiring  means  of  escape  in  case  of  fire,  and  then 


70  WORKMEN'S  COMPENSATION 

developed  into  the  precautions  required  for  the  prevention 
of  fire. 

The  statutes  which  have  for  their  object  the  conservation 
of  the  health  of  employees  have  been  passed  in  recognition 
of  the  practical  consideration  that  the  risks  to  which  workmen 
are  exposed  do  not  arise  wholly  from  the  dangers  of  industrial 
accidents  but  that  workmen  are  also  exposed  to  dangers 
arising  from  disease  and  these  hazards  should  be  eliminated 
as  far  as  possible.  This  legislation  is  general  in  its  nature, 
and  has  not  as  yet  been  developed  to  any  great  extent.  Its 
provisions  relate  principally  to  requirements  for  proper  light- 
ing, heating,  and  ventilation,  so  that  the  physical  condition 
of  workmen  will  be  conserved.  The  hazard  of  disease  in 
industry  exists  in  two  forms,  for  employees  may  be  exposed 
to  dangers  from  which  diseases  will  originate  independent  of 
the  work  in  which  they  are  engaged,  and  they  may  also  be 
exposed  to  dangers  of  disease  from  some  of  the  processes 
arising  from  their  occupations,  which  result  in  the  ''occupa- 
tional diseases,"  so-called.  It  is  the  purpose  of  this  legisla- 
tion, either  by  positive  statutory  provisions  or  by  authorising 
the  proper  administrative  officials  to  issue  the  necessary 
orders,  to  extend  protection  to  workmen  against  all  dangers 
of  disease  as  far  as  protection  can  be  extended,  whether  such 
diseases  are  peculiar  to  any  special  occupation  or  are  general 
in  their  nature. 

The  laws  which  relate  to  mining  and  other  underground 
work  have  the  same  object  as  those  which  relate  to  factories 
and  other  places  in  which  work  is  being  done.  The  specific 
requirements  for  mining  workj  however,  are  so  different  from 
those  for  manufacturing  work  that  this  legislation  is  usually 
codified  in  a  separate  collection  of  laws,  and  the  states  which 
have  large  mining  interests  have  passed  many  laws  regulating 
the  way  in  which  mining  operations  shall  be  conducted  that 


AGITATION  IK  THE  UNITED  STATES       71 

together  constitute  these  mining  codes.  These  regulations 
refer  to  the  condition  of  the  roof,  to  the  ventilation,  to  methods 
of  drilling  and  blasting,  removal  of  accumulations  of  dust, 
illumination,  and  to  many  other  details  which  are  considered 
necessary  for  the  safety  and  health  of  those  working  in  mines. 
The  importance  of  regulation  for  underground  work  other 
than  mining  has  become  apparent  during  the  past  few  years 
because  of  the  amount  of  that  work  which  has  been  necessary 
in  constnicting  the  foundations  for  tall  buildings  and  bridges, 
and  the  tunnel  work  that  has  been  an  incident  of  subway 
construction.  One  of  the  principal  hazards  in  this  work  is 
a  compressed  air  or  caisson  disease  known  as  "bends,"  and 
it  has  been  the  object  of  regulation  either  to  prevent  or  to 
mitigate  the  effects  of  this  disease  as  much  as  possible. 

Many  laws  have  been  passed  to  provide  for  the  safety  of 
persons  engaged  in  the  work  of  transportation  by  land  and 
by  water.  Some  of  these  laws  also  have  for  their  purpose  the 
protection  of  the  persons  who  are  being  transported.  As  the 
larger  number  of  steam  railroad  employees  are  engaged  in 
interstate  commerce,  over  which  the  United  States  has  juris- 
diction because  of  the  grant  of  authority  in  the  Constitution, 
the  most  effective  part  of  this  legislation  is  federal  rather  than 
state  and  so  the  provisions  are  uniform  and  uniformly  en- 
forced as  to  the  great  majority  of  employees  affected  through- 
out the  United  States.  The  protection  of  employees  of  street 
or  interurban  railroads  is  largely  a  matter  of  state  or  munici- 
pal regulation,  for  very  few  of  those  roads  do  an  interstate 
business  so  they  do  not  come  within  federal  jurisdiction. 
The  protection  of  sailors  is  almost  wholly  a  matter  of  federal 
control,  for  so  little  navigation  is  carried  on  entirely  within 
the  bounds  of  a  single  state  that  state  legislation  along  this 
line  is  negligible  both  in  character  and  amount. 

The  application  of  safety  devices  to  railroad  operations 


72  WORKMEN'S  COMPENSATION 

began  with  the  invention  of  the  air  brake.  The  next  step 
was  the  application  of  the  automatic  coupler,  for  very  many 
and  a  considerable  proportion  of  the  accidents  which  happened 
to  trainmen  arose  from  the  necessity  of  going  between  cars 
to  make  couplings  and  until  some  practical  automatic  coupler 
could  be  devised  this  slaughter  seemed  almost  inevitable. 
When  such  couplers  were  devised  and  their  use  required  by 
law  the  number  of  accidents  from  this  cause  was  so  reduced 
that  it  now  constitutes  a  very  small  proportion  of  the  whole 
number.  The  form  which  the  most  recent  agitation  along 
this  line  has  taken  is  the  demand  for  "full  crew  laws,"  and 
this  phase  of  the  matter  has,  up  to  the  present  time,  been 
largely  a  matter  of  state  legislation  because  of  the  absence  of 
any  conflicting  legislation  by  Congress.^ 

The  laws  which  regulate  the  employment  of  women  and 
children  have  been  passed  in  pursuance  of  the  duty  of  the 
state  to  protect  those  who  were  unable  to  protect  themselves, 
and  this  protection  is  of  a  twofold  nature  in  that  it  con- 
templates not  only  the  present  protection  of  these  classes  but 
the  future  protection  of  society.  It  is  to  the  interest  of  the 
future  as  well  as  of  the  present  that  women  shall  not  be 
allowed  to  work  at  occupations  which  are  manifestly  in- 
jurious to  their  health,  and  it  is  just  as  important  that  they 
should  not  be  allowed  to  work  an  excessive  length  of  time  each 
day  in  those  occupations  in  which  their  labour  is  permitted. 
It  is,  therefore,  of  great  social  importance  that  the  working 
conditions  of  women  shall  be  the  subject  of  reasonable  regu- 
lation. It  is  equally  important  that  the  work  of  children  shall 
be  similarly  regulated,  for  their  employment  not  only  pre- 
vents their  education  and  impedes  their  mental  development 

1  For  an  excellent  summary  of  the  principles  of  the  laws  relating 
to  safety  and  health,  see  Principles  of  Labor  Legislation,  Commons  and 
Andrews,  pages  327-349. 


AGITATION  IN  THE  UNITED  STATES        73 

but  it  also  hinders  their  physical  development,  and  so  it  is 
a  menace  to  society  if  their  employment  is  permitted  without 
any  restrictions  or  reg;ulations. 

The  form  which  child  labour  legislation  has  taken  in  most 
of  the  states  is  that  of  an  absolute  prohibition  of  the  employ- 
ment of  minors  below  a  certain  age  in  any  occupation,  and 
the  regulation  of  their  employment  between  the  prohibited 
age  and  an  older  age  above  which  it  is  unrestricted  by  any 
special  regulations  relating  to  minors  as  a  class.  The  laws 
regulating  their  employment  usually  specify  that  the  employer 
shall  have  on  file  a  certificate  from  the  parents  of  the  minor 
certifying  as  to  his  age  and  consenting  to  his  employment, 
and  in  addition  to  this  it  is  sometimes  specified  that  a  certifi- 
cate as  to  attendance  at  school  for  a  certain  period  in  each 
year  shall  be  a  condition  precedent  to  the  legal  employment 
of  a  minor  above  the  prohibited  age  and  under  a  certain  higher 
age.  The  statutes  also  provide  frequently  that  minors  below 
a  given  age  shall  not  be  employed  at  certain  classes  of  work, 
such  as  that  which  involves  proximity  to  dangerous  ma- 
chinery, or  that  which  may  be  considered  injurious  to  their 
health  or  morals.  The  number  of  hours  during  which  minors 
are  allowed  to  work  in  any  one  day  or  in  a  week  in  occupations 
in  which  their  emploj^ment  is  permitted  is  also  one  of  the 
elements  usuallv  fixed  by  these  statutes.-^ 

The  efl^ect  of  the  statutes  relating  to  safety  and  health  is 
to  supplement  the  rules  of  the  common  law  by  prescribing  a 
specific  standard  for  the  conduct  of  the  employer  in  place  of 
the  general  standard  fixed  by  the  common  law.  These 
statutes  do  not  in  any  sense  suspend  the  rule  of  the  common 

1  This  is  only  the  briefest  possible  statement  of  the  principles  of  child 
labour  legislation.  For  a  digest  of  this  legislation  in  the  United  States, 
as  it  existed  several  years  ago,  see  Summary  of  Laws  in  Force  1910, 
Child  Laior,  by  Laura  Scott,  published  by  the  American  Association 
for  Labor  Legislation,  New  York. 


74  WORKMEN'S  COMPENSATION 

law  that  an  employer  must  furnish  his  employee  with  a  safe 
and  suitable  place  in  which  to  do  his  work,  but  they  supple- 
ment and  amplify  that  rule  by  fixing  a  standard  as  to  what 
constitutes  a  safe  and  suitable  place  under  certain  circum- 
stances. In  this  sense  it  may  be  said  that  they  anticipate,  to 
a  certain  extent,  the  development  of  the  common  law,  for  al- 
though common  law  rules  are  necessarily  general  in  their 
nature  they  are  also  progressive,  and  when  it  is  shown  that 
any  standard  of  safety  is  better  than  that  previously  recog- 
nised the  common  law  will  abandon  the  old  standard  and 
adopt  the  new.  Applying  this  principle  to  the  rule  of  the 
common  law  for  establishing  the  negligence  of  an  employer, 
the  failure  to  observe  the  conduct  of  an  "ordinarily  prudent 
employer"  under  similar  circumstances,  it  may  be  said  that 
if  it  is  sho\\Ti  in  any  given  case  that  certain  safety  devices 
were  practicable,  and  that  they  were  in  general  use  by  other 
employers  engaged  in  the  same  line  of  business,  the  employer 
who  has  failed  to  adopt  such  devices  has  not  complied  Avith 
the  standard  and  this  failure  may  be  recognised  as  negligence 
on  his  part  Thus  the  common  law  in  its  development  would 
eventually  come  to  recognise  many  of  the  standards  estab- 
lished by  the  different  statutes,  but  the  enactment  of  those 
statutes  has  obviated  the  delay  which  might  be  a  necessary 
incident  of  the  recognition  by  the  common  law  of  the  princi- 
ples which  they  establish. 

When  a  \aolation  of  one  of  these  statutes  is  shown  in  actual 
litigation  by  an  employee  in  his  attempt  to  recover  damages 
from  his  employer  for  personal  injuries  alleged  to  have  been 
sustained  in  the  course  of  his  employment,  the  effect  is  to 
virtually  eliminate  the  defence  of  contributory  negligence 
and  that  of  assumption  of  risk,  and  also  the  fellow-servant 
defence  if  that  is  in  any  way  involved,  and,  therefore,  to 
establish  the  right  of  an  employee  to  recover.     The  duties 


AGITATION  IN  THE  UNITED  STATES        75 

which  are  thus  imposed  on  the  employer  are  non-delegable 
and  the  employer  cannot  escape  his  responsibility  by  entrust- 
ing their  performance  to  any  one  else,  for  the  person  thus 
delegated  becomes  the  representative  of  the  employer  for 
whose  negligence  the  employer  is  liable  to  the  same  extent 
that  he  would  be  for  his  own.  The  result  is  that  when  such 
a  violation  of  duty  is  established  practically  the  only  element 
remaining  in  the  case  is  the  assessment  of  damages  accord- 
ing to  the  principles  recognised  by  the  common  law,  unless 
perchance  some  statutory  modification  of  those  principles 
enters  into  the  matter.^ 

The  effect  of  a  violation  of  the  child  labour  laws  in  its 
relation  to  a  negligence  action  brought  by  an  injured  minor 
whose  emplo^Tnent  was  against  the  law  is,  in  general,  to 
establish  a  case  of  negligence  per  se  against  the  employer  and 
deprive  him  of  any  defence  that  otherwise  he  might  have  had. 
The  only  effect  of  the  employment  of  a  minor  of  tender  years 
at  common  law  would  be  the  difficulty  in  the  establishment  of 
any  of  the  defences  that  might  be  available,  particularly  that 
of  contributory  negligence  and  that  of  assumption  of  risk,  for 
it  would  have  to  be  shown  that  the  minor  was  of  sufficient 
capacity  to  be  capable  of  contributory  negligence  and  also 
that  he  was  of  capacity  to  understand  the  nature  of  the  work 

1  A  good  illustration  of  the  extremes  to  which  a  court  may  po  in  the 
construction  of  the  statutes  relating  to  safety  and  health  is  found 
in  the  case  of  Caspar  v.  Leivin,  82  Kansas  604;  83  Kansas  799;  109 
Pacific  657,  decided  in  1910.  This  was  a  case  in  which  an  employee 
was  killed  by  being  hurled  around  a  shaft  while  attempting  to  shift 
a  belt,  and  it  wa«  shown  that  a  belt-shifter  had  not  been  provided  as 
required  by  the  Kansas  statutes.  It  was  held  that  all  that  was  neces- 
sary to  establish  the  liability  of  the  defendant  was  to  show  that  his 
failure  to  provide  such  a  safeguard  directly  contributed  to  the  death 
of  the  employee,  and  that  the  defence  of  contributory  negligence  on 
the  part  of  the  deceased  employee  could  not  be  interposed  when  a  stat- 
utory violation  was  shown.  The  opinion  in  this  case  contains  an  inter* 
esting  history  of  these  statutes  in  the  different  states, 


76  WORKMEN'S  COMPENSATION 

and  appreciate  the  dangers  involved  before  he  could  be  held 
to  have  assumed  the  risks  inherent  in  the  employment.  The 
employer  would  not  be  allowed  to  interpose  either  of  these 
defences  against  the  minor  in  case  his  employment  was  pro- 
hibited by  statute,  nor  would  the  fellow-servant  defence  be 
available  against  him,  so  the  liability  of  the  employer  would 
be  absolute  if  illegal  employment  is  shown. ^ 

The  class  of  statutes  affecting  the  liability  of  the  employer 
to  his  employee  which  has  taken  the  name  of  the  subject  itself, 
and  goes  under  the  general  designation  of  "employers'  liabil- 
ity" statutes,  has  for  its  object  the  modification  or  abrogation 

1  Two  cases  decided  by  the  Supreme  Court  of  North  Carolina  are 
worth  citing  in  illustration  of  the  attitude  of  the  courts  when  a  viola- 
tion of  the  child  labour  laws  is  shown.  They  are  Leathers  v.  Tobacco 
Co.,  144  N.  C.  330;  57  S.  E.  11,  decided  in  1907,  and  Starnes  v.  Albion 
Mfg.  Co.,  147  N.  C.  556;  61  S.  E.  525,  decided  in  1908.  In  the  Leathers 
case  it  was  held  that  the  employment  of  a  child  in  a  tobacco  factory 
within  the  age  prohibited  by  statute  was  negligence  per  se,  and  that 
where  a  child  within  the  prohibited  age  was  set  at  work  at  a  machine 
in  a  factory  and  was  injured  while  operating  the  machine,  the  em- 
plojTnent  in  violation  of  the  statute  was  the  proximate  cause  of  the 
injury  as  a  matter  of  law.  In  the  Starnes  case  the  question  of  the 
constitutionality  of  the  statute  was  raised,  and  it  was  held  that  the 
statute  was  not  in  violation  of  either  the  State  Constitution  or  the 
Fourteenth  Amendment  to  the  Constitution  of  the  United  States.  The 
general  power  to  pass  laws  of  this  nature  was  discussed,  and  it  was 
held  that  the  state  as  a  guardian  had  the  right  to  control  the  natural 
rights  of  parents  when  the  welfare  of  society  conflicted  with  parental 
rights,  and  that  the  parents  had  no  vested  riglits  in  the  labour  of  their 
children  but  that  the  state  has  a  paramount  right  to  control  their 
labour  and  education.  In  this  case  it  was  held  that  the  fact  that  a 
minor  illegally  employed  was  injured  at  work  which  he  was  not  em- 
ployed to  do,  and  which  was  entirely  foreign  to  his  emplojTnent,  was 
no  defence,  for  the  luilawful  employment  was  the  proximate  cause  of 
the  injury  and  the  facts  as  to  how  the  injury  was  sustained  were 
immaterial  if  illegal  employment  was  established.  These  cases  show, 
therefore,  that  the  only  element  remaining  in  a  case  where  the  illegal 
employment  of  a  minor  is  alleged  and  proven  is  that  of  the  assessment 
of  damages. 


AGITATION  m  THE  UNITED  STATES       17 

of  the  principal  common  law  defences,  the  fellow-sen^ant  rule, 
the  contributory  negligence  rule,  and  that  of  assumption  of 
risk.  The  particular  statutes  in  this  class  which  have  been 
known  by  the  name  of  "employers'  liability  acts"  have  had 
for  their  precedent  and  model  the  Employers'  Liability  Act 
of  England,  and  practically  all  of  those  statutes  which  have 
been  passed  in  the  United  States  followed  the  English  act 
closely  both  in  principle  and  form.  This  act  was  passed  in 
1880,  so  the  acts  in  the  United  States  which  have  taken  it  for 
their  precedent  and  model  have  necessarily  been  passed  since 
then. 

A  number  of  statutes  which  had  for  their  object  the  modi- 
fication or  abrogation  of  some  of  the  common  law  rules  of 
employers'  liability  had  been  passed  before  the  enactment 
of  any  of  these  so-called  "employers'  liability  acts."  The 
statutes  which  were  thus  passed  dealt  principally  with  the 
fellow-servant  rule,  and  with  one  phase  of  the  application  of 
that  rule  which  was  its  application  to  the  employees  of  rail- 
road companies.  Some  of  these  statutes  were  passed  very 
soon  after  railroads  were  constructed,  and  they  provided,  as 
a  general  proposition^  that  railroad  companies  should  be  liable 
to  any  person  Avho  might  be  injured  in  any  way  by  reason 
of  the  negligence  of  any  of  the  employees  of  the  company, 
80  the  language  was  broad  enough  to  abolish  the  fellow-ser- 
vant rule  in  cases  where  employees  were  injured  even  though 
no  mention  was  made  of  that  particular  nile.^ 

1  It  is  interesting,  from  the  historical  standpoint,  to  note  the  con- 
nection between  railroad  operations  and  the  establishment  and  the 
abrogation  of  the  fellow-servant  rule.  The  rule  was  first  recognised 
in  this  country  in  a  railroad  case,  that  of  Murray  v.  South  Carolina 
R.  R.  Co.,  1  McMullen's  Law,  385;  36  Am.  Dec.  268,  decided  in  South 
Carolina  in  1841.  Although  this  case  was  the  first  to  recognise  the 
rule  it  is  not  regarded  as  the  leading  case  in  its  establishment,  but  the 
case  of  Farwell  v.  Boston  d  Worcester  R.  R.  Corp.,  4  Met.  49;  38  Am. 
Pec.    339,   decided   in   Massachusetts    in    1842,    occupies    this    position, 


78  WORKMEN'S  COMPENSATION 

In  the  meantime,  by  a  process  of  development,  the  com- 
mon law  in  many  jurisdictions  had  come  to  recognise  a  modi- 
fication of  the  fello^v-servant  rnle  in  all  employments  by 
holding  that  an  employee  who  represented  the  employer  was 
not  a  fellow-servant  bnt  a  vice-principal,  and  that  the  em- 
ployer was  liable  to  an  employee  who  was  injured  by  the 
negligence  of  a  vice-principal  because  of  the  fact  that  in 
contemplation  of  law  the  act  of  the  vice-principal  was  that 
of  the  employer.  This  rule  had  little  uniformity  in  its  ap- 
plication throughout  the  United  States,  for  some  states  prac- 
tically refused  to  recognise  it,  and  in  the  different  states  in 
which  it  was  recognised  the  degree  of  authority  which  must 
be  possessed  by  an  employee  before  he  could  be  considered 
a  vice-principal  differed  greatly.  In  some  states  he  must 
have  general  representative  authority,  while  in  others  a  much 
less  amount  of  authority  would  suffice. 

The  English  Employers'  Liability  Act  of  1880  was  a  piece 
of  legislation  which  was  a  declaration  of  the  common  law 
in  some  particulars,  and  in  others  was  a  legislative  recog- 

because  of  the  commanding  position  of  Chief  Justice  Shaw  who  wrote 
the  opinion,  and  because  of  the  reasoning  in  the  opinion  itself.  As 
the  first  cases  which  established  the  rule  were  railroad  cases,  so  the 
first  statutes  which  were  enacted  to  abolish  the  common  law  rule  related 
only  to  railroad  operations.  This  was  doubtless  because  of  the  fact 
that  the  rule  was  established  in  this  connection  and  also  because  of  the 
fact  that  railroad  operations  were  manifestly  more  hazardous  than  many 
of  the  other  industrial  operations  at  the  time  of  the  establishment  of  the 
rule  and  at  the  time  of  the  enactment  of  the  first  statutes  for  its 
abrogation.  In  recent  years  some  of  the  states,  not  satisfied  merely 
Avith  the  passage  of  statutes  abrogating  the  fellow-servant  rule  in  con- 
nection with  railroad  operations,  have  adopted  constitutional  provisions 
for  this  purpose  and  have  thus  made  the  abrogation  of  the  rule  in 
railroad  cases  a  part  of  their  fundamental  law.  Section  193,  Article 
7,  Constitution  of  Mississippi;  Section  16,  Article  XX,  Constitution  of 
New  Mexico;  Section  36,  Article  IX,  Constitution  of  Oklahoma;  Sec- 
tion 15,  Article  9,  Constitution  of  South  Carolina;  Section  162,  Article 
12,  Constitution  of  Virginia. 


AGITATIOiT  IN  THE  UNITED  STATES        T9 

nition  of  the  vice-principal  rule.  It  provided,  in  brief,  that 
the  employer  should  be  liable  to  an  employee  who  was  in- 
jured because  of  any  defective  ways,  works,  or  machinery, 
or  by  the  negligence  of  a  superintendent,  or  of  a  person  en- 
trusted with  the  power  of  giving  orders,  or  in  case  of  rail- 
way companies  the  negligent  management  of  trains,  points 
and  signals.  As  to  the  first  specification,  that  of  defective 
ways,  works  or  machinery,  this  was  merely  declaratory  of 
the  common  law;  as  to  the  others  the  enactment  was  simply 
an  extention  of  the  vice-principal  rule,  and  it  carried  that 
rule  no  further  than  the  courts  might  have  come  to  apply 
it  in  the  development  of  the  common  law.  Legislation  of 
this  nature,  for  various  reasons,  was  not  generally  adopted 
in  the  United  States,  but  the  few  states  which  did  pass  Em- 
ployers' Liability  Acts  drafted  their  statutes  along  the  lines 
of  the  English  act.^ 

The  statutes  which  have  specifically  considered  the  de- 
fences of  contributory  negligence  and  assumption  of  risk  have 
been,  to  a  large  extent,  simply  declaratory  of  the  common 
law  rules  relating  to  those  defences.  However,  all  of  the 
statutes  which  impose  any  obligations  relating  to  the  safety 

1  During  the  twenty-five  years  following  the  passage  of  the  English 
act  only  five  similar  acts  were  passed  in  the  United  States,  as  fol- 
lows:— Alabama  in  1885;  Massachusetts  in  1887;  Colorado  and  In- 
diana in  1893;  and  New  York  in  1902.  The  Colorado  act  was  affected 
by  the  passage  of  a  statute  abrogating  the  fellow-servant  rule  in  1901, 
and  the  Indiana  act  was,  by  construction  in  order  to  sustain  its  con- 
stitutionality, held  to  apply  only  to  railroad  operations.  For  a  com- 
pilation of  the  diflferent  statutes  relating  to  employers'  liability  in 
force  at  the  end  of  1907  see  Bulletin  of  the  Bureau  of  Labor  (Wash- 
ington), Vol.  XVI  (No.  74,  January,  1908),  pages  54-91.  Subsequent 
to  1907  several  of  the  states  passed  legislation  of  this  kind,  but  by 
this  time  the  agitation  for  a  system  of  workmen's  compensation  had 
become  so  active  that  the  attention  of  the  legislators  was  turned  to 
the  abolition  of  the  common  lanv  system  rather  than  to  attempts  to 
strengthen  it  and  continue  it  in  force. 


80  WORKMEN'S  COMPENSATION 

of  employees  on  the  employer  have  a  direct  bearing  on  these 
two  defences,  for  when  a  violation  of  such  a  statutory  ob- 
ligation by  the  employer  is  shown  the  effect  is,  in  general, 
to  deprive  the  employer  of  those  defences.  One  of  the  in- 
cidents of  the  agitation  for  more  stringent  employers'  lia- 
bility laws  has  been  the  change  in  the  attitude  of  the  courts 
in  the  application  of  these  defences,  for  at  one  time  many 
of  the  courts  were  inclined  to  hold  that  certain  circumstances 
constituted  contributory  negligence  or  assumption  of  risk 
as  a  matter  of  law  and  that  there  was  no  jury  issue  in- 
volved, while  at  a  later  time  the  courts  in  the  same  juris- 
diction would  submit  similar  facts  to  the  jury  to  determine 
whether  or  not  the  plaintiil  was  guilty  of  contributory  neg- 
ligence or  had  assumed  the  risks  of  the  hazards  to  which  he 
was  exposed.  The  natural  effect  of  this  procedure  has  been, 
in  view  of  the  sympathy  of  juries  for  injured  plaintiffs,  to 
enlarge  the  rights  of  an  employee  against  his  employer  when 
either  of  these  defences  were  involved.  Some  of  the  states 
have  gone  to  the  extent  of  incorporating  provisions  in  their 
constitutions  that  these  defences  should  at  all  times  be  left  to 
the  jury.^ 

The  efficacy  of  the  laws  relating  to  safety  and  health  and 
those  regulating  the  labour  of  women  and  children  depend 
upon  their  observance  and  enforcement.  The  primary  pur- 
pose of  these  statutes,  as  has  already  been  noted,  is  the  pre- 
vention of  industrial  casualties  and  the  conservation  of  hu- 
man resources  rather  than  the  establishment  of  the  liability 
of  the  employer,  and  any  laws  which  have  this  purpose 
necessarily  fail  unless  they  are  observed,  either  by  voluntary 
action  or  by  compulsion,  by  those  subject  to  their  provisions. 
Experience  has  shown  that  the  enforcement  of  laws  of  this 

1  Section  5,  Article  XVIII,  Constitution  of  Arizona ;  Section  6,  Arti- 
cle XXIII,  Constitution  of  Oklahoma. 


AGITATION  IN  THE  UNITED  STATES       81 

kind  by  voluntary  action  is  ineffective,  and  that  if  such  laws 
are  to  have  any  effect  at  all  the  state  must  see  that  they  are 
enforced,  and  this  enforcement  is  something  which  must  be 
made  a  function  of  a  special  branch  of  the  executive  de- 
partment of  government  rather  than  an  addition  to  the  other 
work  of  the  executive  authorities. 

The  laws  in  most  of  the  states,  in  which  any  provisions 
for  their  enforcement  appear,  have  imposed  the  duties  of 
enforcement  upon  the  Labor  Departments.  The  usual  pro- 
cedure has  been  either  to  make  factory  inspection  and  the 
enforcement  of  labour  legislation  generally  one  of  the  gen- 
eral duties  of  the  Labor  Department,  or  to  make  special 
provisions  for  this  service  by  the  creation  of  a  Bureau  or 
Department  of  Factory  Inspection  which  shall  be  a  part  of 
the  organisation  of  the  Labor  Department.  The  only  way 
in  which  violations  of  the  law  can  be  discovered,  in  advance 
of  litigation  in  which  such  a  violation  is  alleged,  is  by  in- 
spection of  working  places,  so  this  element  of  inspection  is 
a  vital  element  in  the  proper  administration  of  labour  laws. 

The  practice  of  factory  inspection  varies  greatly  in  the 
different  states,  but  as  a  general  proposition  it  may  be  said 
that  in  many  of  the  states  the  duties  of  the  Factory  In- 
spector have  been  performed  in  a  very  perfunctory  way,  and 
that  the  laws  relating  to  safety  and  health  and  those  regu- 
lating the  labour  of  women  and  children  have  to  a  large 
extent  failed  in  the  purpose  of  their  enactment  because  of 
indifference  in  their  enforcement.  This  is  due  to  defects 
both  in  the  quantity  and  the  quality  of  factory  inspection. 
The  defect  in  quantity  may  be  attributed  to  the  fact  that  the 
laws  do  not  provide  for  a  sufficient  number  of  inspectors  to 
do  the  work,  and  so  inspections  are  necessarily  infrequent 
and  superficial.  The  defect  in  quality  is  attributable,  funda- 
mentally, to  the  fact  that  inspectors  may  be  appointed  who 


82  WOKKMEN'S  COMPEl^SATIOK 

lack  the  necessary  qualifications  for  the  work.  This  condi- 
tion may  arise  from  two  causes^  one  of  which  is  that  the  laws 
in  many  of  the  states  specify  no  particular  technical  or  prac- 
tical training  on  the  part  of  men  who  receive  these  appoint- 
ments, and  so  leave  the  places  legitimate  political  plunder, 
and  the  other  is  the  fact  that  the  salary  and  term  of  office 
fixed  by  law  may  not  be  sufficiently  attractive  to  secure  those 
who  possess  the  necessary  qualifications. 

The  provisions  in  the  different  statutes  regarding  access 
to  working  places  and  the  penalties  for  hindering  or  ob- 
structing Inspectors  in  connection  with  their  work  are  usually 
sufficiently  drastic,  if  enforced,  to  secure  all  of  the  necessary 
co-operation  from  employers  for  making  inspections,  but  the 
practical  conditions  have  been  such  that  the  science  of  Fac- 
tory Inspection  has  not  been  developed  to  any  degTee  of 
efficiency  as  a  governmental  function  in  many  of  the  states 
of  the  United  States,  and  as  a  result  the  different  factory 
laws  have  not  had  the  effect  that  they  might  have  had  if  they 
had  been  properly  enforced.-^ 

The  different  statutes  which  were  passed,  the  development 
of  the  common  law  rules,  and  the  change  in  the  attitude  of 
the  courts  regarding  their  application,  tended  to  enlarge  the 
rights  of  recovery  of  injured  employees,  but  while  their  legal 
rights  were  thus  enlarged  the  practical  situation  regarding 

1  This  brief  summary  has  considered  Factory  Inspection  only  as  one 
of  the  functions  of  government  imposed  upon  the  executive  branch  by 
the  factory  laws,  so  no  mention  has  been  made  of  the  inspection  by 
employers  and  by  private  organisations  whose  object  it  is  to  see  that 
human  life  and  limb  are  conserved.  Inspection  of  this  nature,  prompted 
by  an  enlightened  selfishness,  has  almost  imiformly  proved  more  effi- 
cient and  more  effective  than  that  conducted  by  the  state  in  accord- 
ance with  the  provisions  of  the  statutes.  See  Legislative  Summary  A'o. 
1,  Administration  of  Labor  Laws,  C.  B.  Austin,  published  by  the  Amer- 
ican Association  for  Labor  Legislation  in  1909,  for  a  digest  of  the 
provisions  for  the  enforcement  of  labour  laws  then  in  force. 


AGITATION  IN  THE  UNITED  STATES       83 

the  procedure  for  their  enforcement  tended  to  nullify  the 
rights  which  the  law  allowed  them,  for  these  changes  in  the 
substantive  law  were  unaccompanied  by  corresponding 
changes  in  the  administrative  law  and  the  enforcement 
of  the  rights  was  still  subject  to  the  older  forms  of  pro- 
cedure. This  situation  still  necessitated  litigation  in  cases 
where  the  employer  refused  to  recognise  his  liability  to 
respond  in  damages  to  an  injured  employee,  and  this  liti- 
gation was  subject  to  the  element  of  uncertainty  on  the  part 
of  the  plaintiff  as  to  his  ability  to  establish  his  right  to  re- 
cover, to  the  element  of  uncertainty  as  to  the  amount  of  re- 
covery when  his  right  was  established,  to  the  element  of 
delay  which  can  be  made  an  incident  of  almost  all  litigation, 
and  to  the  element  of  uncertainty  as  to  the  collection  of  any 
final  judgment  that  might  be  recovered. 

The  practical  situation,  therefore,  under  the  more  string- 
ent employers'  liability  laws,  in  view  of  the  increase  in  the 
number  and  severity  of  industrial  accidents,  was  little  better 
than  it  had  been  before  the  passage  of  these  statutes,  and  it 
was  seen  by  practical  students  of  the  problem  that  the  remedy 
did  not  consist  in  the  strengthening  of  the  common  law  sys- 
tem but  in  its  abolition  and  in  the  substitution  for  it  of  a 
system  under  which  industry  would  be  compelled  to  compen- 
sate for  the  injuries  which  it  caused,  under  which  the  ele- 
ment of  uncertainty  as  to  the  amount  which  an  injured  em- 
ployee was  entitled  to  receive  would  be  eliminated,  under 
which  the  element  of  delay  in  enforcing  the  right  to  compen- 
sation would  also  be  eliminated,  and  which  would  substitute 
certainty  of  receiving  the  compensation  to  which  an  injured 
was  entitled  for  the  uncertainty  which  existed  under  the  com- 
mon law  system. 


84  WORKMEN'S  COMPENSATION 

EEFERENCES 

Economic  Theory  and  Labor  Legislation,  R.  T.  Ely,  American 
Association  for  Labor  Legislation,  First  Annual  Meeting 
(1907),  pages  10-39. 

Some  Fundamental  Distinctions  in  Labor  Legislation,  H.  W. 
Farnam,  American  Association  for  Labor  Legislation,  Sec- 
ond Annual  Meeting  (1908),  pages  29-42. 

Principles  of  Labor  Legislation,  J.  R.  Commons  and  J.  B. 
Andrews. 

Regulation  of  the  Physical  Conditions  of  Employment,  L.  D. 
Clark,  The  Law  of  the  Employment  of  Labor,  Chapter  IV. 

Employment  of  Women  and  Children,  L.  D.  Clark,  The  Law  of 
the  EmplojTuent  of  Labor,  Chapter  V. 

Labor  Laws  and  their  Enforcement,  edited  by  S.  M.  Kings- 
bury. 

Labor  Laws,  F.  J.  Stimson,  Popular  Law-making,  Chapter  XL 

Labor  Laws  of  the  United  States,  1913,  Bulletin  No.  148,  Bureau 
of  Labor  Statistics,  Department  of  Labor,  Washington. 

Labor  Legislation  of  1914,  Bulletin  No.  166,  Bureau  of  Labor 
Statistics,  Department  of  Labor,  Washington. 

Labor  Legislation  of  1915,  Bulletin  No.  186,  Bureau  of  Labor 
Statistics,  Department  of  Labor,  Washington. 

Summary  of  Laws  in  force  1910,  Child  Labor,  American  Asso- 
ciation for  Labor  Legislation. 

Administration  of  Labor  Laws,  1909,  American  Association  for 
Labor  Legislation. 


CHAPTER  V 

EAELY    ATTEMPTS    IN    THE    UNITED    STATES 

The  first  decade  of  the  twentieth  century  was  a  period 
of  agitation  in  the  United  States  for  a  change  in  the  existing 
system  of  employers'  liability,  and  by  that  time  the  system 
of  workmen's  compensation  in  some  forai  or  other  had  be- 
come so  established  in  practically  all  civilised  nations  that 
the  United  States  instinctively  turned  to  some  such  system 
as  a  substitute  for  the  existing  system.  During  this  decade 
several  attempts  were  made  to  establish  this  principle  in  one 
form  or  another  by  several  of  the  states,  but  none  of  these 
attempts  were  successful  and  it  was  not  until  the  second 
decade  of  the  century  that  the  principle  was  adopted,  and  it 
seems  that  this  decade  will  see  the  principle  fully  estab- 
lished as  a  part  of  the  jurisprudence  of  practically  all  of 
the  states  in  the  United  States.  While  none  of  the  attempts 
which  were  made  by  the  different  states  to  establish  the 
compensation  system  during  the  first  decade  were  successful, 
Congress  by  the  Act  of  May  30,  1908,  35  Statutes  at  Large, 
556,  established  the  principle  to  a  limited  extent  as  to  cer- 
tain classes  of  Govenmient  employees,  but  in  this  legislation 
Congress  possessed  arbitrary  power  and  was  not  hindered 
by  the  constitutional  restrictions  which  surrounded  the  State 
Legislatures,  so  this  action  of  Congress  cannot  be  regarded 
as  a  precedent  for  the  action  of  the  states  but  simply  as  an 
incident  in  the  history  of  the  movement  for  the  establishment 
of  the  compensation  principle. 

85 


86  WORKMEN'S  COMPENSATION 

While  no  tangible  action  was  taken  towards  the  abrogation 
of  the  common  law  system  of  employers'  liability  in  the 
United  States  until  after  the  close  of  the  nineteenth  century, 
there  is  plenty  of  evidence  that  the  matter  was  receiving  the 
attention  of  students  of  the  subject  in  this  country  during 
the  last  decade  of  that  century,  and  that  the  different  methods 
of  dealing  with  the  problem  adopted  by  the  European  na- 
tions had  made  a  profound  impression  upon  those  who  were 
giving  consideration  to  the  subject.  As  early  as  1891  the 
late  Mr.  Carroll  D.  Wright,  then  Commissioner  of  the  De- 
partment of  Labor  (Washington),  had  commissioned  Mr. 
John  Graham  Brooks  to  make  a  study  of  the  German  sys- 
tem, then  only  a  few  years  old,  and  the  result  of  his  investi- 
gation was  published  in  the  Fourth  Special  Report  of  the 
Commissioner  of  Labor,  Compulsory  Insurance  in  Ger- 
many, in  1893.  In  1898  Mr.  William  Franklin  Willoughby, 
then  connected  with  the  Department  of  Labor,  in  Wash- 
ington, had  published  a  book  on  Worhingmen's  Insurance, 
reviewing  the  compulsory  systems  in  force  in  Europe  and 
the  different  voluntary  systems  in  force  in  the  United  States, 
and  calling  attention  to  the  lack  of  any  action  in  this  country 
while  the  movement  had  been  going  on  in  Europe.  In  1898 
the  General  Court  of  Massachusetts,  by  Chapter  78  of  the 
Resolves  of  1898,  had  instructed  the  Bureau  of  Labor  Sta- 
tistics of  Massachusetts  to  investigate  "the  subject  of  labor 
and  co-operative  insurance,"  and  this  report  was  published 
in  1901  as  Part  II  of  the  Thirty-first  Annual  Report  of 
the  Bureau,  pages  65-248.  This  report  dealt  principally 
with  the  systems  in  force  in  Europe,  and  closed  with  a  few 
general  suggestions  as  to  the  administration  of  such  systems 
without  making  any  special  recommendations. 

The  constitutional  obstacles,  particularly  those  of  a  techni- 
cal nature,  which  the  compensation  principle  had  to  sur- 


EARLY  ATTEMPTS  87 

mount  will  be  discussed  in  a  later  chapter/  but  before  pro- 
ceeding any  further  it  is  necessary  to  mention  the  practical 
considerations  which  from  a  constitutional  standpoint  im- 
peded the  inception  of  legislation  which  would  substitute 
the  compensation  system  for  the  existing  common  law  sys- 
tem. It  is  the  same  as  that  which  was  noted  in  connection 
with  the  subject  of  the  statutes  which  were  passed  relating 
to  employers'  liability,  the  nature  of  our  system  of  govern- 
ment. While  this  problem  is  essentially  national  in  its  scope 
it  is  local  in  its  solution,  for  it  is  a  matter  over  which  Con- 
gress has  no  authority,  except  as  to  employees  of  the  federal 
government  and  the  limited  confines  of  federal  jurisdiction, 
so  that  the  only  practical  and  effective  action  that  can  be 
taken  must  be  taken  by  the  different  states. 

The  result  of  this  constitutional  situation  is  that  the  adop- 
tion of  any  system  which  is  a  radical  departure  from  an 
existing  system,  and  which  may  tend  to  put  the  citizens  of 
one  state  at  a  disadvantage  in  competition  with  citizens  of 
other  states,  is  naturally  a  subject  of  serious  consideration, 
and  action  in  such  cases  is  usuallv  slow  and  conservative. 
This  was  one  of  the  arg-uments  used  against  the  adoption  of 
stringent  employers'  liability  laws,  particularly  the  laws 
which  were  based  on  the  English  Employers'  Liability  Act, 
for  it  was  contended  that  unless  such  legislation  became  prac- 
tically universal  in  all  manufacturing  states  the  employers 
in  those  states  which  passed  this  legislation  would  be  at  a  con- 
siderable disadvantage  as  compared  with  the  employers  of 
other  states  because  of  the  increase  to  them  in  the  cost  of 
industrial  accidents,  which  must  necessarily  be  added  to  the 
cost  of  manufacture,  and  which  would,  therefore,  make  the 
cost  of  the  finished  product  higher  to  manufacturers  in  those 
states  which  had  stringent  employers'  liability  laws  than  it 

1  See  Chapter  VI,  The  Constitutionality  of  Compensation  Legislation. 


88  WORKMEN'S  COMPENSATION 

v.'as  to  manufacturers  in  those  states  whicli  had  adopted  no 
such  legislation. 

This  argument  was  all  the  stronger  when  it  was  proposed 
to  adopt  a  system  under  which  the  employer  would  be  com- 
pelled to  pay  compensation  for  all  industrial  accidents,  and 
each  state  hesitated,  because  of  this  practical  consideration, 
to  impose  such  a  burden  on  its  employers  when  the  em- 
ployers of  neighbouring  and  competing  states  were  free 
from  it.  It  was  easily  seen  that  any  such  system  meant  a 
considerable  increase  in  cost  over  the  existing  system,  and 
that  this  element  of  cost  must  be  added  to  the  other  elements 
of  the  cost  of  production,  so  the  only  logical  conclusion  was 
that  this  cost  would  be  increased  by  the  adoption  of  such  a 
system  and  that  it  would  necessarily  be  greater  in  states 
which  had  a  compensation  system  than  it  was  in  the  states 
which  had  adopted  no  such  system. 

In  view  of  this  practical  constitutional  situation  the  log- 
ical method  of  tracing  the  history  of  this  movement  in  the 
United  States  would  be  by  outlining  its  progress  in  each 
particular  state  which  has  adopted  the  compensation  sys- 
tem, but  in  considering  the  problem  as  one  of  national  rather 
than  of  local  significance  the  proper  method  is  to  trace  its 
progress  chronologically  in  the  different  states.  It  must  be 
reiterated,  however,  that  in  this  matter  each  state  has  been 
free,  subject  to  constitutional  limitations,  to  adopt  any  sys- 
tem that  it  saw  fit  to  adopt,  independent  of  the  action  of  any 
of  the  other  states  except  as  such  action  might  be  used  as 
a  precedent.  The  result  has  been  that  while  the  same  gen- 
eral principle  has  been  observed  by  the  different  states  which 
have  enacted  compensation  laws  there  has  been  a  considerable 
diversity  in  the  details  of  the  laws.  Each  state  as  it  has 
considered  the  proposition  has  usually  studied  the  laws  of 
the    states    which    have    adopted    the    system,    but    various 


EAELY  ATTEMPTS  89 

changes  have  been  suggested  so  we  find  this  difference  in  de- 
tail. 

The  first  workmen's  compensation  bill  to  be  actually  in- 
troduced in  this  country  was  introduced  in  the  New  York 
Senate  on  February  28,  1898,  by  Mr.  John  Ford,  then  a 
member  of  the  Senate,  now  a  Justice  of  the  Supreme  Court 
of  New  York.  The  movement  which  resulted  in  the  intro- 
duction of  this  bill  had  its  inception  in  the  Social  Reform 
Club,  of  New  York  City.  This  club,  cognisant  of  the  com- 
pensation systems  of  Europe,  particularly  of  the  German 
Social  Insurance  System  and  the  British  Workmen's  Com- 
pensation Act  of  1897,  appointed  a  committee  to  study  the 
subject  of  which  Mr.  ]\Iiles  M,  Dawson  was  chairman,  and 
the  bill  introduced  by  Senator  Ford  was  prepared  by  this 
committee.  The  bill,  which  was  modelled  to  a  considerable 
extent  on  the  British  Act,  was  referred  to  the  Judiciary 
Committee  but  was  never  reported  by  that  committee.^  A 
number  of  causes  were  ascribed  by  those  interested  in  the 
bill  for  its  lack  of  consideration.  The  time  was  not  ripe 
for  such  legislation,  its  pui*pose  was  misunderstood,  and  so 
the  efforts  for  its  passage  were  abandoned.  It  is  said,  how- 
ever, that  the  movement  set  in  motion  by  this  attempt  finally 
resulted  in  the  passage  of  the  New  York  Employers'  Liability 
Act  of  1902. 

The  first  state  in  the  United  States  to  enact  a  law  declara- 
tory of  the  compensation  principle  was  Maryland.  This 
law  is  found  in  Chapter  139,  Acts  of  1902,  and  although  it 
was  only  fragmentary  in  character  and  ineffective  in  oper- 
ation, both  because  of  the  fact  that  only  a  few  of  the  employers 
who  were  subject  to  its  operation  elected  to  accept  its  pro- 
visions and  because  of  the  fact  that  it  was  declared  uncon- 
stitutional at  the  first  opportunity  a  court  had  to  rule  on  the 

1  Senate  Journal,  New  York,  1898,  pages  400-401. 


90  WOKKMEN'S  COMPENSATION 

question,  it  is  of  more  than  passing  interest  to  the  student  of 
workmen's  compensation  because  of  its  historical  signifi- 
cance. 

The  law  was  exceedingly  limited  in  its  scope.  It  applied 
only  to  the  business  of  "operating  any  coal  or  clay  mine, 
quarry,  steam  or  street  railroad"  and  the  work  of  municipal 
corporations  in  "constructing  any  sewer,  excavation,  or  other 
physical  structure"  or  the  contractors  engaged  in  such  work 
for  municipal  corporations.  It  provided  that  the  employers 
in  those  occupations  should  be  liable  for  injuries  or  death 
sustained  by  reason  of  the  negligence  of  the  employer  or  of 
any  of  his  servants,  except  that  in  case  of  contributory  neg- 
ligence on  the  part  of  the  injured  or  deceased  the  damages 
should  be  one-half  of  the  damages  that  otherwise  would  have 
been  payable.  While  both  non-fatal  and  fatal  injuries  were 
mentioned,  the  statute  was  ineffective  as  to  non-fatal  injuries 
because  no  scale  of  indemnities  was  fixed  for  such  injuries. 
The  law  then  provided  that  none  of  the  employers  should  be 
liable  if  they  made  certain  payments  to  the  Insurance  Com- 
missioner to  foiTti  an  Insurance  Fund,  the  rate  for  the  differ- 
ent classes  of  employments  being  specified  except  that  for 
the  work  of  municipal  corporations,  which  was  left  discretion- 
ary with  the  Insurance  Commissioner.  It  was  also  provided 
that  the  employer  might,  if  he  so  informed  his  employees, 
deduct  a  proportion  of  the  premium  not  exceeding  one-half 
from  their  wages. 

The  fund  thus  created  was  to  be  known  as  "The  Employers' 
and  Employees'  Co-operative  Insurance  Eund,"  and  the  In- 
surance Commissioner  was  to  be  its  custodian  and  administra- 
tor. The  payment  to  be  made  to  the  dependents  in  fatal 
cases  was  one  thousand  dollars.  It  was  provided  that  no 
contract  waiving  the  provisions  of  the  act  should  be  lawful, 
and  also  that  the  Insurance  Commissioner  might  release  em- 


EAKLY  ATTEMPTS  91 

ployers  from  the  provisions  of  the  act  when  shown  that  such 
employers  were  making  better  provisions  for  their  employees 
than  were  required  by  the  act.  The  report  of  the  operation 
of  the  act  shows  that  only  nine  employers  elected  to  avail 
themselves  of  its  pro\asions,  and  that  five  settlements  in  fatal 
cases  were  made  while  it  was  in  force.  It  was  declared  un- 
constitutional by  an  inferior  court  in  April  1904  and  no 
appeal  was  taken  from  that  decision,  so  its  operation  was 
ended.  ^ 

By  a  resolve  of  the  Massachusetts  Legislature,  Chapter  8Y, 
Resolves  of  1903,  approved  June  5,  1903,  the  Governor  was 
authorised  to  appoint  a  committee  of  five  persons  to  be  known 
as  the  Committee  on  Relations  between  Employer  and  Em- 
ployee. This  committee  was  directed  to  examine  and  con- 
sider the  laws  of  the  Commonwealth  concerning  a  variety 
of  matters  regarding  the  legal  relations  of  employer  and  em- 
ployee, among  which  was  included  that  of  "the  liability  of 
the  employer  for  injuries  received  by  the  employee  in  the 
course  of  his  employment."  This  committee  was  appointed 
June  9,  1903,  and  was  headed  by  the  late  Mr.  Carroll  D. 
Wright,  one  of  the  acknowledged  authorities  of  his  day  on 
matters  of  labour  legislation,  and  the  pioneer  in  the  adminis- 
tration of  labour  laws,  the  collection  of  labour  statistics,  and 
in  the  investigation  of  matters  concerning  the  relation  of 
capital  and  labour,  who  a  number  of  years  before,  as  Com- 

1  Franklin  v.  The  United  Railways  and  Electric  Company  of  Balti- 
more, Court  of  Common  Pleas  of  Baltimore,  April  27,  1904.  This  opin- 
ion is  given  in  Vol.  XI  of  the  Bulletin  of  the  Bureau  of  Labor  (Wash- 
ington), page  689.  No.  57,  March,  1905.  No  mention  of  the  consti- 
tutional features  of  this  legislation  is  made  here,  because  that  phase 
of  the  subject  is  discussed  in  the  chapter  on  "The  Constitutionality  of 
Compensation  Legislation,"  infra.  For  a  summary  of  the  operation 
of  this  act  see  the  above  named  volume  of  the  Bulletin  of  the  Bureau 
of  Labor,  pages  645-648. 


92  WORKMEN'S  COMPENSATION 

missioner  of  Labor,  in  Washington,  had  been  responsible  for 
the  investigation  by  Mr.  John  Graham  Brooks  into  the  Ger- 
man System  of  Compulsory  Insurance,  to  which  reference  has 
already  been  made  in  this  chapter. 

This  committee  reported  to  the  Senate  and  House  of 
Eepresentatives  on  January  13,  1904.^  The  conunittee  re- 
viewed the  common  law  system  of  employers'  liability  with 
its  statutory  modifications,  and  reported  that  it  was  deemed 
inexpedient  to  amend  the  Employers'  Liability  Act.  It  then 
noted  the  compensation  systems  of  the  different  foreign  coun- 
tries and  the  principle  upon  which  they  were  based  and 
recommended  the  enactment  of  a  workmen's  compensation 
bill,  a  draft  of  which  was  incorporated  in  the  report,  modelled 
substantially  on  the  British  Workmen's  Compensation  Act  of 
1897. 

Neither  this  bill  nor  any  substitute  for  it  was  passed,  and 
it  does  not  appear  that  this  part  of  the  report  ever  received 
any  very  serious  consideration  from  the  General  Court,  but 
inasmuch  as  it  is  the  first  comprehensive  compensation  bill, 
with  the  exception  of  the  New  York  bill  already  mentioned, 
which  was  suggested  in  any  of  the  states  of  the  United  States, 
and  as  it  is  the  first  to  have  been  suggested  as  a  result  of 
official  investigation,  and  because  it  had  the  sanction  of  Mr. 
Wright,  it  is  well  worthy  of  consideration  as  an  important 
incident  in  the  history  of  the  compensation  movement  in  the 
United  States. 

The  bill  was  limited  in  its  application  to  railroad  oper- 
ations, work  in  a  factory,  workship,  mine,  quarry,  engineer- 
ing work,  and  construction  work  where  scaffolds  or  ladders 
were  used,  or  on  which  power-driven  machinery  was  used. 

1  Report  of  Committee  on  Relations  letiveen  Employer  and  Employee, 
Boston,  January,  1904.  The  report  and  the  appendix  make  a  pamphlet 
of  one  himdred  and  eighteen  pages,  of  which  twenty  were  devoted  to 
the  subject  of  Employers'  Liability,  pages  36-56. 


EAKLY  ATTEMPTS  93 

It  was  committed,  therefore,  to  the  principle  of  a  limitation 
in  the  application  of  compensation  laws,  but  the  enumeration 
and  the  definitions  of  terms  were  broad  enough  to  include 
practically  all  employments  which  involved  any  occupational 
dangers,  so  the  law  would  have  been  general  in  its  application 
if  it  had  been  enacted.  It  applied  to  "personal  injury  while 
performing  duties  growing  out  of  or  incidental"  to  the  em- 
ployments which  were  covered,  but  it  preserved  the  rights 
of  the  employee  in  cases  where  the  injury  was  caused  by  the 
negligence  of  the  employer,  or  that  of  any  person  for  whose 
negligence  he  was  liable,  by  allowing  the  employee  to  elect 
after  the  injury  either  to  receive  compensation  under  the  act 
or  to  proceed  independently  of  it,  but  his  election  was  final 
and  he  was  bound  by  the  proceedings  first  instituted.  The 
employee  could  not  receive  compensation  if  injured  by  his 
own  wilful  or  fraudulent  misconduct. 

'No  compensation  was  payable  for  an  injury  which  did  not 
disable  an  injured  for  at  least  one  week.  After  the  first  week 
the  payment  in  non-fatal  cases  was  to  be  fifty  per-cent  of  the 
average  weekly  wages,  not  to  exceed  ten  dollars  a  week,  for 
a  period  not  exceeding  four  years.  In  fatal  cases  the  de- 
pendents who  were  wholly  dependent  were  to  receive  three 
years'  earnings  of  the  deceased  or  one  thousand  dollars,  which- 
ever was  the  largest,  but  not  exceeding  two  thousand  dollars; 
those  partly  dependent  were  to  receive  a  sum  not  exceeding 
that  paid  to  those  wholly  dependent,  the  amount  to  be  de- 
termined upon  by  agreement  or  arbitration. 

The  bill  contemplated  the  adjustment  of  all  disputes  be- 
tween the  parties  by  a  committee  on  which  employer  and 
employee  should  have  equal  representation,  but  if  this  com- 
mittee failed  to  come  to  an  agreement  the  matter  was  to  be 
submitted  to  a  single  arbitrator  agreed  on  by  the  parties, 
or  in  the  absence  of  such  agreement  the  arbitrator,  who  should 


94  WOKKMEN'S  COMPENSATIOIT 

be  called  a  referee,  should  be  appointed  by  any  Justice  of  the 
Superior  Court.  Appeal  from  the  decision  of  the  referee  on 
matters  of  law  could  be  taken  to  the  Supreme  Judicial  Court. 

This  bill  was  manifestly  incomplete  according  to  later 
standards  of  compensation  legislation,  but  the  committee 
which  proposed  it  contained  representatives  of  both  capital 
and  labour  and  there  was  no  dissent  from  any  member  of  the 
committee  as  to  that  part  of  the  report,  so  it  shows  that  both 
of  those  interests  were  dissatisfied  with  the  existing  system 
of  employers'  liability  and  would  welcome  a  change  to  the 
compensation  principle.  If  any  doubts  as  to  the  constitution- 
ality of  the  proposed  bill  arose  in  the  minds  of  the  committee 
they  were  not  expressed. 

In  1905  the  General  Assembly  of  Illinois  by  a  resolution 
approved  by  the  House  on  May  2d  and  by  the  Senate  on  May 
4th,  page  401,  Laws  of  1905,  authorised  the  appointment  of 
a  commission  of  five  members  who  should  serve  without  re- 
numeration  and  whose  duties  were  to  investigate  the  matter 
of  providing  a  plan  for  industrial  insurance  and  old  age 
pensions  for  workingmen,  and  draft  a  bill  for  these  purposes 
for  the  consideration  of  the  next  General  Assembly,  and  make 
their  report  to  the  Governor.  This  commission  investigated 
and  reported  as  directed,  the  report  being  printed  in  1907  by 
the  State  of  Illinois  in  a  pamphlet  of  thirty  pages  entitled 
"Report  of  the  Industrial  Insurance  Commission  to  the  Gov- 
ernor of  Illinois." 

This  report  noted  the  different  legal  systems  which  had 
been  devised  in  the  civilised  nations  for  dealing  with  the 
problem  of  the  industrial  accident,  and  reviewed  briefly  the 
common  law  system  pointing  out  the  salient  features  of  the 
defects  and  shortcomings  of  that  system.  It  did  not  make 
any  recommendations  upon  the  matter  of  old  age  pensions, 
and  it  did  not  go  into  that  subject  at  all,  for  it  stated  that 


EAKLY  ATTEMPTS  95 

the  most  natural  approach  to  that  much  needed  protection 
was  through  accident  insurance,  and  the  commission  had  not 
had  adequate  time  for  maturing  plans  on  that  subject.  The 
passage  of  a  law  was  recommended  whereby  employers  and 
employees  could  agTee  upon  a  system  of  insurance  against 
accidents  which  might  occur  in  the  course  of  employment  that 
would  be  a  substitute  for  the  common  law  system  of  em- 
ployers' liability,  and  a  draft  of  a  bill  which  would  estab- 
lish such  a  system  was  presented  with  the  report. 

This  bill  proposed  that  the  employer  and  employee  might 
by  agreement  substitute  a  system  of  accident  insurance  for 
occupational  injuries  for  the  existing  common  law  rights. 
It  was  provided  that  this  insurance  should  be  effected  in  any 
casualty  insurance  company  authorised  to  transact  that  class 
of  business  in  the  state,  or  that  employers  who  had  not  less 
than  fifteen  hundred  employees  might  establish  their  own 
fund,  the  records  of  which  should  be  subject  to  the  inspection 
of  the  Superintendent  of  Insurance  in  the  same  manner  as 
those  of  the  insurance  companies.  Benefits  were  provided 
for  non-fatal  injuries  and  for  the  dependents  in  fatal  cases. 
The  employer  was  to  pay  at  least  one-half  of  the  premium 
necessary  to  carry  the  insurance  and  the  employees  were  to 
pay  the  balance.  ISTeither  this  bill  nor  any  substitute  for  it 
became  a  law,  and  the  common  law  system  remained  in  force 
until  in  part  superseded  by  the  compensation  legislation  of 
1911.1 

1  The  report  of  the  Illinois  Commission  is  a  most  significant  document 
in  the  history  of  the  compensation  movement.  The  bill  suggested  em- 
bodied a  principle  which  was  already  recognised  at  common  law,  and 
was  some  extension  of  that  principle,  so  there  seemed  to  be  no  question 
as  to  the  constitutionality  of  the  proposed  legislation.  The  acceptance 
of  benefits  after  an  injury  imder  a  pre-existing  contract  had  been  held 
as  not  in  violation  of  public  policy  at  common  law,  for  although  there 
might  be  some  objection  to  such  a  contract  on  the  ground  that  it  de- 


96  WOKKMEN'S  COMPENSATION 

In  the  meantime  President  Roosevelt,  impressed  by  the 
injustice  of  the  common  law  system^  had  begun  an  agitation 
for  the  adoption  of  the  compensation  system,  but  as  the  power 
of  Congress  in  this  particular  was  limited  to  a  very  small 

prived  the  courts  of  their  jurisdiction,  it  was  held  that  the  acceptance 
of  the  benefits  rather  than  the  making  of  the  contract  was  the  factor 
wliich  Avaived  the  common  law  rights,  and  that  this  acceptance  was 
valid.  The  matter  had  been  the  subject  of  statutory  modification  in 
several  of  the  states,  some  statutes  declaring  that  such  an  agreement 
should  not  constitute  a  waiver  of  legal  rights,  while  others  specified 
that  the  benefits  thus  received  from  the  employer  might  be  shown  in 
reduction  of  the  damages  assessed  in  a  common  law  action. 

The  proposed  bill,  therefore,  gave  statutory  sanction  to  the  practice 
already  recognised  at  common  law.  The  agreement  suggested  was  abso- 
lutely voluntary,  and  neither  employer  nor  employee  were  penalised  if 
they  did  not  enter  into  tlie  agreement.  Subsequent  experience  shoAved 
tliat  the  bill,  if  it  had  been  enacted,  would  doubtless  have  been  inef- 
fective, for  a  few  years  later  laws  embodying  a  similar  principle  were 
passed  in  Massachusetts  and  New  York  which  were  disregarded  and 
so  were  inclTective,  and  there  is  no  reason  to  believe  that  the  situation 
in  Illinois  would  have  been  any  different.  The  suggestion  of  this  prin- 
ciple, however,  is  very  significant  in  its  relation  to  the  compensation 
movement,  for  as  the  suggested  voluntary  agreement  was  an  extension 
of  a  principle  already  recognised  at  common  law,  so  the  principle  of 
an  elective  compensation  law,  which  was  devised  and  put  into  opera- 
tion in  a  number  of  the  states  in  order  to  overcome  the  constitutional 
objections  which  were  interposed  to  compulsory  compensation  laws,  was 
a  logical  extension  of  this  principle,  the  fundamental  difference  between 
this  voluntary  agreement  and  the  elective  compensation  law  being  the 
element  of  compulsion  which  impels  both  the  employer  and  the  em- 
ployee to  come  within  the  provisions  of  an  elective  law.  Thus  this 
suggestion  of  the  voluntary  agreement  seems  to  be  the  connecting  link 
between  the  waiver  of  common  law  riglits  in  return  for  certain  bene- 
fits, which  was  recognised  by  the  common  law,  and  the  principle  of 
the  elective  compensation  law.  It  was  also  suggested  in  Wisconsin  that 
a  law  which  would  embody  this  principle  might  be  adopted  as  a  sub- 
stitute for  the  existing  system  of  employers'  liability,  but  no  action  was 
taken  towards  the  adoption  of  such  a  law.  Part  I,  Thirteenth  Bienmal 
Report,  1907-08,  Bureau  of  Labor  and  Industrial  Statistics,  Wisconsin, 
pages  111-114. 

This  report  possesses  further  significance  because  of  the  fact  that 
appended  to  it,  but  without  recommendation  for  action  by  the  General 


EAKLY  ATTEMPTS  97 

field  outside  of  any  legislation  that  it  might  pass  to  com- 
pensate injured  employees  of  the  federal  government  Mr. 
Roosevelt's  agitation  did  not  have  any  tangible  results  aside 
from  the  limited  compensation  act  for  government  employees 
which  became  a  law  on  May  30,  1908.  The  effect  of  his 
utterances,  however,  should  not  be  underestimated,  for  al- 
though they  did  not  result  in  the  passage  of  any  legislation 
by  CongTess  for  the  territory  over  which  it  possessed  juris- 
diction and  the  Act  of  May  30,  1908,  is  exceedingly  limited 
in  its  scope,  yet  the  ideas  which  he  expressed  gave  a  great 
impetus  to  the  movement  for  a  change  from  the  existing 
system  to  a  compensation  system.  The  desire  for  such  a 
change  was  already  becoming  crystalised  in  definite  plans  of 
action  in  several  of  the  states,  and  the  moral  influence  of  Mr. 
Eoosevelt  in  favour  of  this  change  was  a  factor  which  must 
have  helped.^ 

Assembly,  was  a  draft  of  a  bill  which  provided  for  a  system  of  com- 
pulsory insurance  for  disability  caused  by  injuries  received,  or  illness 
or  other  incapacity  contracted  in  the  course  of  employment.  This  bill 
was  a  modification  of  the  German  System  of  Compulsory  Insurance. 
The  coimsel  for  the  Commission,  wlio  drew  the  bill  in  accordance  with 
the  desire  of  the  Commission,  sent  a  letter  to  the  secretary  of  the  Com- 
mission in  which  he  expressed  the  opinion  that  the  proposed  legisla- 
tion was  unconstitutional,  and  this  letter  was  printed  with  the  report. 
The  secretary  in  commenting  on  the  views  of  the  counsel  stated  that 
if  experience  counted  for  anything  it  was  safe  to  assume  that  a  satis- 
factory insurance  s.ystem  could  not  be  M'orked  out  and  put  into  operation 
without  legal  requirement,  for  only  a  small  majority  of  the  workmen 
were  able  to  organise  such  a  system  and  employers  generally  would  not 
take  the  trouble  to  organise  adequate  systems.  If,  therefore,  the  pro- 
posed compulsory  insurance  system  was  unconstitutional  the  hope  was 
expressed  that  some  way  might  be  devised  to  obviate  the  constitutional 
objections.  The  bill  actually  offered  for  present  enactment,  that  estab- 
lishing a  vohmtary  insurance  system,  was  only  a  temporary  expedient, 
but  it  contained  a  principle  which  might  gradually  expand  until  the 
desired  results  were  reached. 

1  The   official   utterances   of   President   Roosevelt   on   the   question   of 
employers'  liability  and  workmen's  compensation  are  contained  in  sev- 


98  WOKKMEN'S  COMPENSATION 

The  Act  of  Congress  of  May  30,  1908,  35  Statutes  at 
Large,  556,  applied  the  compensation  principle  to  certain 
classes  of  government  employees.  Those  included  were 
labourers  in  manufacturing  establishments,  arsenals  or  navy 
yards,  on  construction  of  river  and  harbour  or  fortification 
work,  and  hazardous  employments  in  the  reclamation  of  arid 
lands  or  under  the  Isthmian  Canal  Commission.  This  act 
was  amended  by  the  Act  of  March  4,  1911,  36  Statutes  at 
Large,  1363,  so  as  to  include  all  employees  of  the  Isthmian 
Canal  Commission ;  and  it  was  further  amended  by  the  Act 
of  March  11,  1912,  37  Statutes  at  Large,  74,  to  include  em- 
ployees engaged  in  hazardous  work  under  the  Bureau  of  Mines 
or  in  the  Forestry  Service,  and  by  the  Act  of  July  27,  1912, 
37  Statutes  at  Large,  238-39,  to  include  employees  in  any 
hazardous  employment  in  the  Lighthouse  Service. 

The  law  provided  for  the  payment  of  full  wages  to  in- 

eral  messages  to  Congress.  In  his  message  of  December  3,  1906,  he 
made  a  general  reference  to  the  subject.  This  was  after  the  passage 
of  the  Employers'  Liability  Act  relating  to  common  carriers,  and  he 
took  occasion  to  commend  this  legislation  and  endorse  the  principle 
that  the  risk  of  industrial  accidents  should  be  placed  on  industry  itself. 
Abridgment  of  the  Messages  and  Documents,  1906,  Vol.  1,  pages  21-22. 
In  his  message  of  December  3,  1907,  he  made  the  following  statement: 
"I  urge  upon  Congress  the  enactment  of  a  law  which  will  at  the  same 
time  bring  Federal  legislation  up  to  the  standard  already  established 
by  all  European  countries,  and  which  will  serve  as  a  stimulus  to  the 
various  states  to  perfect  their  legislation  in  this  regard."  Abridgment 
of  the  Messages  and  Documents,  1907,  Vol.  1,  pages  25-27.  Shortly 
after  this,  on  January  6,  1908,  the  Act  of  June  11,  1906,  which  Presi- 
dent Roosevelt  had  commended  in  his  message  of  December  3,  1906,  was 
declared  unconstitutional  by  the  Supreme  Court  of  the  United  States, 
The  Employers'  Liability  Cases,  207  U.  S.  461,  and  this  was  the  occasion 
of  a  special  message  on  January  31,  1908,  Congressional  Record,  60th 
Congress,  1st  Session,  pages  1347-49,  during  the  course  of  which  the 
President  vigorously  urged  the  passage  of  a  compensation  law  for  Gov- 
ernment employees.  The  subject  was  again  mentioned  in  his  last  regu- 
lar message  to  Congress,  that  of  December  8,  1908.  Abridgment  of  the 
Messages  and  Documents,  1908,  Vol.  1,  pages  16-18. 


EARLY  ATTEMPTS  99 

jured  employees  in  cases  where  the  injury  was  not  due  to  the 
negligence  or  misconduct  of  the  injured  employee  and  where 
the  disability  lasted  more  than  fifteen  days,  for  a  period  of 
one  year  after  the  injury,  if  the  disability  lasted  that  length 
of  time.  In  fatal  cases  the  law  specified  certain  dependents 
to  whom  the  payments  should  be  made  during  the  balance 
of  one  year  from  the  date  of  the  injury  after  the  death  of 
the  injured.  The  administration  of  the  law  was  vested  first 
in  the  Secretary  of  Commerce  and  Labor,  and  later,  after 
the  establishment  of  a  separate  Department  of  Labor,  in  the 
Secretary  of  Labor.  All  questions  regarding  the  applica- 
tion of  the  law  were  to  be  determined  by  the  Secretary,  and 
his  decision  was  final. 

Although  this  legislation  did  not  produce  a  scientific  com- 
pensation law  its  passage  was  an  event  of  considerable  signif- 
icance in  the  compensation  movement,  because  it  committed 
the  federal  government  to  the  compensation  principle.  The 
situation  was  worse  for  government  employees  than  it  was 
for  the  employees  of  private  employers,  for  under  the  theory 
that  a  sovereign  government  could  not  be  sued  without  its 
consent  the  employees  of  the  federal  government  who  were 
injured  in  the  course  of  their  employment  had  no  redress 
at  all  except  that  the  individual  might  appeal  to  Congress 
for  relief,  but  if  he  was  unsuccessful  in  his  appeal  to  Con- 
gress he  received  no  compensation.  This  law  reached  only 
a  small  proportion  of  the  government  employees,  and  it  was 
manifestly  inadequate  in  non-fatal  cases  where  the  disability 
lasted  over  a  year,  and  in  fatal  cases  where  dependents  sur- 
vived, but  as  a  concession  on  the  part  of  Congress,  as  a  rec- 
ognition of  the  compensation  principle,  and  as  a  precedent 
for  the  action  of  the  states,  it  was  a  step  in  the  right  direc- 
tion. 

A  statute  was  passed  in  Massachusetts  in  1908,  Chapter 


100  WORKMEN'S  COMPENSATION 

489,  Acts  and  Eesolves  of  1908,  which  sanctioned  the  prin- 
ciple of  a  voluntary  agreement  for  compensation  as  a  substi- 
tute for  the  common  law  liability  that  had  been  recommended 
to  the  General  Assembly  of  Illinois  by  the  Industrial  In- 
surance Commission.  The  Illinois  bill  provided  for  a  system 
of  insurance  in  accordance  with  a  scale  of  benefits  fixed  by 
law.  The  Massachusetts  act  as  originally  passed  provided 
that  any  employer  of  labour  might  submit  a  plan  of  compensa- 
tion to  the  State  Board  of  Conciliation  and  Arbitration,  and 
that  the  Board,  after  due  notice  and  a  public  hearing,  might 
if  it  considered  the  plan  fair  and  just  give  it  approval.  The 
employer  could  then  enter  into  a  contract  with  his  employees 
to  substitute  this  plan  for  his  common  law  liability,  but  ap- 
proval of  any  such  plan  by  the  employees  should  not  be  re- 
quired as  a  condition  precedent  to  employment.  The  act  was 
amended  in  1909,  Chapter  211,  Acts  and  Eesolves  of  1909, 
so  as  to  permit  the  employees  to  petition  the  Board  for  an 
approval  of  a  plan  submitted  by  them,  and  this  plan  when 
approved  by  the  Board  and  adopted  by  the  employer  should 
have  the  same  effect  as  a  plan  suggested  by  the  employer  and 
adopted  by  the  employees  after  approval  by  the  Board. 

This  legislation  in  Massachusetts  was  rendered  absolutely 
nugatory  by  the  failure  of  both  employers  and  employees  to 
submit  any  plans  for  approval,  but  it  is  significant  because 
it  was  the  first  legislation  general  in  its  application  which 
permitted  the  substitution  of  a  voluntary  system  of  compen- 
sation for  the  liability  imposed  by  the  common  law.  The 
compensation  law  in  Massachusetts  followed  so  closely  after 
the  enactment  of  this  legislation  that  it  may  perhaps  be  said 
that  the  law  never  had  a  fair  chance  to  show  its  merits,  but 
there  seems  to  be  good  reason  to  believe  that  it  would  not  have 
afforded  any  relief  from  the  common  law  system,  and  as  this 


EAKLY  ATTEMPTS  101 

voluntaiy  system  of  compensation  did  not  work  in  Massa- 
chusetts there  is  no  reason  to  believe  that  it  would  have  worked 
in  the  other  states. 

In  1909  a  law  was  passed  in  Montana,  Chapter  67,  Laws  of 
1909,  establishing  the  "Employers'  and  Employees'  Co-opera- 
tive Insurance  and  Total  Permanent  Disability  Fund."  This 
law  applied  only  to  labourers  employed  in  and  around  any 
coal  mines  and  coal  washers  in  the  state.  It  provided  that 
the  operators  of  the  mines  and  washers  should  pay  one  cent 
a  ton  for  every  ton  of  coal  mined,  and  that  the  employees 
should  allow  one  per  cent,  of  their  monthly  wages  to  be  de- 
ducted each  month,  these  amounts  to  be  paid  to  the  State 
Auditor,  who  should  in  turn  pay  the  money  over  to  the  State 
Treasurer  for  custody.  The  fund  established  was  to  be 
administered  by  the  State  Auditor,  whose  authority  over  its 
administration  was  both  arbitrary  and  plenary. 

The  law  provided  that  in  fatal  cases  a  payment  of  three 
thousand  dollars  should  be  made  to  the  dependents.  In  non- 
fatal cases  where  permanent  incapacity  resulted  a  payment 
not  to  exceed  one  dollar  a  day  was  to  be  made.  The  injured 
was  allowed  to  elect  after  an  injury  either  to  accept  the 
benefits  of  the  law  or  to  enter  a  suit  at  common  law;  the 
acceptance  of  benefits  waived  his  common  law  rights,  and 
conversely  the  commencement  of  a  suit  to  recover  at  common 
law  forfeited  the  right  to  receive  benefits  under  this  law. 
This  provision  of  the  law,  however,  was  responsible  for  its 
overthrow,  for  it  was  declared  unconstitutional  because  of 
the  fact  that  the  employer  had  no  immunity  from  suit  at 
common  law,  for  after  he  had  made  payments  to  the  Fund  as 
required  by  law  the  employee  could  still  sue  at  common  law, 
and  he  was  still  required  to  defend  and  be  responsible  for  any 
judgment  that  might  be  recovered,  hence  the  law  was  declared 


102  WORKMEN'S  COMPENSATION 

invalid  because  it  deprived  the  employer  of  the  equal  pro- 
tection of  the  law.^ 

In  1910  a  statute  was  passed  in  Maryland,  Chapter  153, 
Laws  of  1910,  which  established  the  "Miners'  Co-operative 
Insurance  Fund"  for  the  miners  of  Allegany  and  Garrett 
Counties.  The  law  established  a  separate  fund  for  each 
county,  and  taxed  the  operators  and  the  employees  equally  for 
the  support  of  the  fund.  The  Treasurer  of  each  county  was 
made  the  custodian  of  the  fund  for  his  county,  and  the  County 
Commissioners  of  each  county  were  the  administrators  of 
the  funds.  Payments  were  specified  for  both  fatal  and  non- 
fatal injuries,  the  acceptance  of  benefits  constituting  a  waiver 
of  the  rights  of  the  dependents  or  of  the  injured  at  common 
law.  It  was  provided  that  in  cases  of  recovery  by  suit  the 
operator  might  after  having  satisfied  the  judgment  deduct 
that  amount  from  the  future  pa^^ments  to  the  fund.  The 
bringing  of  a  suit  to  recover  damages  at  common  law  operated 
as  a  forfeiture  of  the  right  to  receive  benefits  from  the  Fund. 

In  1909  the  Legislature  of  New  York,  by  Chapter  518  of 
the  Laws  of  1909,  authorised  the  appointment  of  a  Com- 
mission to  investigate  the  matter  of  employers'  liability. 
This  Commission  consisted  of  three  members  from  the  Senate, 
fi.ve  members  from  the  Assembly,  and  five  members  appointed 
by  the  Governor.  The  members  who  were  appointed  by  the 
Governor  represented  both  employers  and  employees,  and  also 
the  economists  who  had  been  studying  the  problem  in  its  theo- 
retical aspects.  This  investigation  in  New  York  was  one  of 
the  most  significant  and  productive  events  in  the  whole  com- 
pensation movement  in  this  country,  because  sentiment  had 
already  crystalised  in  favour  of  a  change  in  the  existing 
system,  the  work  of  the  Commission  was  thorough,  and  it 

1  Cunningham  v.   'Northwestern  Improvement  Co.,   44  Montana,   180; 
119  Pacific,  554. 


EAELY  ATTEMPTS  103 

attracted  attention  all  over  the  country.  It  resulted  in  the 
enactment  of  a  compulsory  compensation  law  which,  although 
it  was  limited  in  its  scope  and  was  soon  declared  uncon- 
stitutional, was  the  entering  wedge  in  compensation  legisla- 
tion in  the  United  States,  and  in  the  enactment  of  a  law  which 
permitted  the  substitution  of  a  voluntary  compensation 
scheme  for  the  common  law  liability,  along  the  line  of  the 
legislation  which  had  been  suggested  in  Illinois  and  adopted 
in  Massachusetts,  for  employments  which  did  not  come  within 
the  scope  of  the  compulsory  compensation  law.  Both  of  these 
laws  were  passed  substantially  as  recommended  by  the  Com- 
mission.-^ 

The  compulsory  compensation  law  which  was  passed  on  the 
recommendation  of  the  Commission  applied  to  certain  em- 
ployments which  were  "determined  to  be  especially  danger- 
ous." The  employments  were:  structural  iron  work;  the 
operation  of  hoisting  machines  in  connection  with  construction 
work;  work  on  scaffolds  elevated  twenty  feet  or  more;  work 
around  apparatus  charged  with  electric  currents ;  work  where 
explosives  were  used;  the  operation  of  railroads;  the  con- 
struction of  tunnels  and  subways ;  and  work  carried  on  under 
compressed  air.  It  will  be  seen  at  a  glance  that  the  practi- 
cal constitutional  objection  to  this  legislation  was  obviated  by 
making  the  law  apply  only  to  occupations  which  were  non- 
competitive in  their  nature  as  far  as  other  states  were  con- 
cerned, so  that  the  element  of  the  increase  in  cost  to  New 
York  employers  was  not  a  factor  in  the  case  from  that  stand- 
point. 

In  cases  where  injuries  were  caused  in  the  specific  classes 
of  employments  by  a  risk  inherent  in  the  nature  of  the  em- 
ployment, or  by  the  failure  of  the  employer  or  of  any  of  his 
officers,  agents,  or  employees  to  exercise  due  care  or  to  comply 

1  Report  to  the  Legislature  of  the  State  of  New  York,  March  19,  1910, 


104  WOKKMEN'S  C0MPE:N'SATI0N" 

with  any  law  affecting  such  employment,  the  act  allowed  the 
injured  employee  to  elect  to  receive  the  benefits  provided  in 
the  law  or  to  pursue  his  remedy  at  common  law  independent 
of  the  act,  but  either  election  when  once  made  was  final.  If 
he  started  an  action  at  common  law  this  procedure  automati- 
cally waived  his  rights  under  the  compensation  act,  and  the 
acceptance  of  benefits  under  this  act  likewise  automatically 
waived  his  rights  at  common  law.  The  benefits  specified 
were,  in  brief,  in  fatal  cases  a  payment  to  total  dependents 
of  twelve  hundred  times  the  daily  earnings  of  the  deceased, 
subject  to  a  maximum  of  three  thousand  dollars ;  the  payment 
to  partial  dependents  was  a  proportionate  sum  of  that  allowed 
to  total  dependents,  not  exceeding  the  maximum,  according 
to  the  injury  which  could  be  shown  to  such  dependents;  in 
non-fatal  cases  the  payment  was  fifty  per  cent,  of  the  average 
weekly  wages  during  disability,  subject  to  a  maximum  of 
ten  dollars  a  week,  for  a  period  not  exceeding  eight  years 
from  the  date  of  the  accident.  The  compensation  payments 
were  made  preferential  claims  against  the  assets  of  the  em- 
ployer, but  no  security  for  their  payment  was  required. 

]S[o  special  administrative  features  were  provided  in  the 
law.  It  was  specified  that  disputes  arising  under  it  should 
be  settled  either  by  agreement  or  by  arbitration  as  provided  in 
the  code  of  civil  procedure,  or  that  an  action  might  be  brought 
in  the  courts  to  enforce  rights  under  the  law.  The  life  of 
this  legislation  was  short.  It  went  into  effect  on  September 
1,  1910,  and  was  declared  unconstitutional  in  the  case  of  Ives 
V.  South  Buffalo  Railroad  Co.,  201  N.  Y.  271,  94  K  E.  431, 
on  March  24,  1911,  but  during  the  period  while  it  was  in 
force  its  operation  was  rendered  practically  nugatory  by  the 
provision  in  it  which  allowed  the  injured  party  to  elect,  after 
an  injury,  whether  to  accept  the  benefits  of  the  law  or  to  stand 
on  his  rights  independent  of  this  law. 


EAELY  ATTEMPTS  105 

The  voluntary  compensation  law,  Chapter  352,  Laws  of 
1910,  went  into  effect  on  the  same  date  as  the  compulsory  law. 
This  law  amended  the  existing  Employers'  Liability  Law,  and 
then  proceeded  to  establish  a  voluntary  compensation  system 
which  employer  and  employee  might  by  agreement  substitute 
for  the  existing  system.  The  agreement  must  be  in  writing 
signed  by  both  employer  and  employee,  or  their  authorised 
agents,  and  acknowledged  in  the  same  manner  as  conveyances 
of  real  property ;  it  must  then  be  filed  with  the  County  Clerk 
in  the  county  in  which  it  was  signed  by  the  employee.  Both 
parties  were  then  bound  by  the  agreement,  and  the  injured 
employee  or  his  personal  representatives  had  no  other  rights 
against  the  employer  except  in  cases  where  the  injury  or 
death  was  caused  by  the  failure  of  the  employer  to  obey 
authorised  orders  regarding  the  safety  of  his  employees,  or  by 
his  serious  or  wilful  misconduct.  Agreements  made  in  ac- 
cordance with  the  law  could  be  cancelled  at  any  time  by 
either  party  on  sixty  days'  notice  to  the  other. 

The  scale  of  benefits  was  just  the  same  as  that  specified 
in  the  compulsory  compensation  law.  The  administration 
of  the  law  was  also  substantially  the  same  as  that  of  the  com- 
pulsory law,  the  act  providing  that  any  question  of  law  or  fact 
which  might  arise  regarding  the  application  of  the  law  should 
be  determined  either  by  agreement  or  arbitration,  or  by  an 
action  at  law.  The  only  difference  between  this  provision 
in  the  two  laws  was  that  the  action  specified  for  recovery 
under  the  compulsory  law  was  that  for  negligence  while  under 
the  voluntary  law  the  action  was  that  for  a  breach  of  a 
written  contract.  As  in  the  compulsory  law  no  security  was 
required  for  the  performance  of  the  obligations;  the  rights 
to  receive  the  payments  constituted  preferential  claims 
against  the  assets  of  the  employer  the  same  as  claims  for 
unpaid  wages  for  personal  services. 


106  WORKMEN'S  COMPEiTSATION 

This  law  was  similar  in  principle  to  the  Massachusetts  law 
which  has  already  been  noted  in  this  chapter,  but  it  went 
further  than  the  Massachusetts  law  in  that  it  prescribed  the 
scale  of  benefits  which  should  be  paid  when  agTeements  were 
made  in  accordance  with  its  provisions.  The  experience 
with  this  law  in  its  practical  operation  was  the  same  as  that 
with  the  Massachusetts  law;  it  was  rendered  nugatory  and 
ineffective  by  the  failure  of  employers  and  employees  to  make 
the  agreements  which  it  sanctioned.  The  lesson  which  was 
learned  from  this  legislation  in  Massachusetts  and  'New  York 
was  that  a  compensation  system  which  was  in  fact  based  upon 
the  voluntary  agreement  of  employers  and  employees  was  an 
impractical  solution  of  the  problem  of  employers'  liability. 

EEFEEENCES 

Practically  all  of  the  references  to  this  chapter  have  been  given 
in  the  text  or  in  the  notes.  In  addition  to  those  cited  the  follow- 
ing may  be  noted: 

Report  of  Atlantic  City  Conference  on  Workmen's  Compensation 
Acts,  July  1909;  published  by  H.  V.  Mercer,  Minneapolis, 
Minn. 

Eecent  Action  relating  to  Employers'  Liability  and  Workmen's 
Compensation,  L.  D.  Clark,  Bulletin  of  the  Bureau  of 
Labor  (Washington),  Volume  XXI,  page  675.  (Septem- 
ber, 1910.) 

Proceedings  of  Conference  of  Commissioners  on  Compensation 
for  Industrial  Accidents,  Chicago,  November,  1910;  pub- 
lished by  A.  T.  Saunders,  Clinton,  Mass. 

Problems  and  Progress  of  Workmen's  Compensation  Legislation, 
T.  I.  Parkinson,  American  Labor  Legislation  Review,  Vol.  I, 
page  55. 


CHAPTER  VI 

THE    CONSTITU'nOlSrALlTY    OF    COMPENSATION    LEGISLATION 

The  practical  constitutional  situation  which  impeded  the 
inception  of  compensation  legislation  in  the  United  States 
has  already  been  mentioned.  Each  state  hesitated  to  impose 
any  burdens  on  its  employers  which  would  put  them  at  a 
disadvantage  with  the  employers  of  other  states  with  whom 
they  were  in  competition,  and  so  the  inception  of  this  legisla- 
tion was  postponed  until  employers  in  all  commercial  and 
manufacturing  states  were  convinced  that  a  change  was  neces- 
sary, and  that  when  a  satisfactory  solution  of  the  different 
difficulties  which  surrounded  the  adoption  of  the  compensa- 
tion principle  was  found  and  a  law  passed  in  one  state  which 
would  serve  as  a  precedent  for  the  action  of  other  states, 
each  state  would  adopt  this  principle  with  little  delay  so  that 
the  objections  which  were  interposed  to  this  legislation  from 
this  standpoint  would  in  effect  be  eliminated. 

Passing  from  the  practical  to  the  technical  constitutional 

consideration  it  mav  be  said,  as  a  brief  statement  of  the  case, 

that  when  legislation  was  proposed  which  would  at  one  stroke 

substitute  the  idea  of  the  liability  of  the  employer  without 

any  fault  on  his  part  for  that  of  his  liability  based  on  some 

actual  or  constructive  negligence,  around  which  the  common 

law  system  of  employers'  liability  centred,  the  first  question 

that  suggested  itself,  after  the  necessity  and  the  expediency 

of  this  legislation  had  been  admitted,  was,  is  such  legislation 

constitutional  ?     Does  it  conflict  with  any  of  the  constitutional 

107 


108  WORKMEN'S  COMPENSATION 

limitations  placed  upon  the  arbitrary  exercise  of  legislative 
power  in  the  interests  of  the  citizens  of  a  state?  Can  the 
legislature  make  the  employer  pay  in  cases  in  which  he  is  in 
no  way  responsible  for  injuries  received  by  his  employee 
during  the  course  of  his  employment,  and  conversely  can  the 
legislature  deprive  the  employee  of  his  right  to  recover  com- 
pensatory damages  from  his  employer  for  injuries  which  he 
can  show  were  caused  by  reason  of  the  negligence  of  the  em- 
ployer? The  constitutional  limitations  protect  both  parties, 
and  so  the  rights  of  both  must  be  considered. 

In  considering  this  subject  of  the  constitutionality  of  com- 
pensation legislation  the  basic  distinction  should  be  noted 
at  the  outset  between  a  statute  which  simply  abrogates  an 
established  rule  of  the  common  law  and  one  which  conflicts 
with  some  right  guaranteed  by  a  written  constitution.  Some 
of  the  rules  which  constitute  the  common  law  system  of  em- 
ployers' liability  w^ere  based  simply  on  rulings  of  the  courts 
as  to  the  principles  of  the  common  law  as  specific  cases  were 
presented  for  determination,  while  others  rested  upon  princi- 
ples which  had  their  basis  in  rights  which  were  guaranteed 
by  the  federal  and  state  constitutions.  There  could  be  no 
question  as  to  the  constitutionality  of  any  legislation  which 
simply  altered  the  rules  of  the  common  law,  but  if  it  could  be 
shown  that  such  legislation  conflicted  with  any  constitutional 
rights  the  courts  must  declare  it  invalid. 

"  In  establishing  the  principle  of  liability  without  fault, 
which  is  one  of  the  basic  elements  of  the  compensation  system, 
the  legislatures  at  one  stroke  eliminated  the  three  recognised 
defences  which  have  been  available  to  the  employer  when 
actions  have  been  brought  against  him  by  an  employee  for 
injuries  alleged  to  have  been  sustained  in  the  course  of  his 
employment,  that  of  assumption  of  risk,  the  fellow-servant 
rule,  and  the  defence  of  contributory  negligence.     The  ques- 


CONSTITUTIONALITY  109 

tion  then  arises  as  to  whether  or  not  the  employer  has  a  right 
to  either  one  of  these  defences  which  is  protected  by  any 
constitutional  provisions.  If  so  the  legislation  is  invalid,  but 
if  not  it  is  a  valid  exercise  of  legislative  power. 

The  defence  of  assumption  of  risk  rests  upon  the  principle 
that  an  employee  assumes  the  risk  of  all  of  the  dangers  in- 
herent in  his  employment  of  which  he  is  cognizant,  and  against 
which  he  is  as  well  able  to  protect  himself  as  any  one  else  can 
protect  him.  The  statutes  which  were  passed  relating  to  this 
defence  prior  to  the  compensation  laws  were  largely  declara- 
tory of  common  law  principles,  and  provided  that  the  em- 
ployee should  assume  only  the  ordinary  risks  incident  to  his 
employment,  or  that  this  issue  should  in  all  cases  be  one  of 
fact  for  the  jury  to  determine.  If  any  of  these  statutes  had 
attempted  to  abrogate  this  rule  altogether  there  might  have 
been  some  question  as  to  their  validity,  but  as  they  were  in 
the  final  analysis  simply  declaratory  of  the  common  law  it 
does  not  seem  that  any  such  question  could  arise. 

The  fellow-servant  rule  is  a  rule  of  the  common  law  which 
is  safeguarded  by  no  constitutional  protection.  It  is,  in  fact, 
an  exception  to  the  general  rule  of  the  common  law.  The 
law  of  master  and  servant  before  the  industrial  era  grew  up 
around  two  general  principles,  that  of  the  liability  of  the  mas- 
ter to  third  parties  for  the  torts  of  his  servant  committed  in 
the  scope  of  his  employment,  and  the  rights  of  the  master 
against  third  parties  for  acts  because  of  which  the  master 
might  have  been  deprived  of  the  services  of  his  servant.  It 
was  a  principle  of  the  common  law  that  a  master  was  liable 
to  third  persons  who  were  injured  by  the  servant  by  acts  done 
within  the  scope  of  his  employment,  and  when  the  occasion 
arose  it  was  attempted  to  hold  the  employer  liable  to  an  em- 
ployee who  was  injured  in  the  course  of  his  employment  by 
reason  of  the  negligence  of  a  co-employee,  but  instead  of  allow- 


110  WORKMEN'S  COMPENSATION 

ing  the  employee  the  same  rights  which  a  third  party  had 
against  the  employer  in  such  cases  it  was  held  that  the  risk 
of  injury  from  the  acts  of  a  co-employee  was  one  of  the 
hazards  which  the  employee  assumed  as  an  incident  of  his 
employment  and  no  recovery  was  allowed. 

This  rule  was,  therefore,  an  exception  to  the  rule  of  the 
common  law  which  had  previously  been  recognised,  and  many 
statutes  were  passed  by  virtue  of  which  it  was  either  modified 
or  abolished.  As  the  rule  was  based  only  on  the  decisions  of 
the  courts  as  to  the  application  of  the  common  law  and  not 
upon  any  constitutional  guarantees  there  could  be  no  question 
as  to  the  validity  of  the  legislation  if  the  legislature,  in  the 
exercise  of  its  discretion,  decided  to  pass  laws  in  modification 
or  abolition  of  it,  and  such  laws  as  were  enacted  passed  un- 
challenged as  to  the  lack  of  legislative  authority  to  pass  this 
legislation,  for  it  was  assumed  that  the  legislature  had  the 
power  to  place  employees  on  the  same  basis  as  to  the  liability 
of  the  employer  for  injuries  sustained  in  connection  with 
his  business  operations  as  those  who  were  not  employees. 
"  The  defence  of  contributory  negligence  is  based  on  the 
rule  founded  on  natural  justice  that  when  injury  is  caused 
to  a  person  solely  because  of  his  own  negligence  there  is  no 
logical  reason  why  any  other  person  should  be  compelled  to 
recompense  the  injured  in  any  way  for  the  financial  conse- 
quences of  his  injury,  and  this  rule  is  applicable  alike  to 
employers'  liability  cases  and  to  cases  where  the  relation  of 
employer  and  employee  does  not  exist.  When  any  legislation 
attempts  to  deprive  the  employer  of  this  defence  and  make 
him  absolutely  liable  for  injuries  sustained  by  his  employee 
during  the  course  of  his  emplo\Tnent,  regardless  of  any  actual 
or  constructive  fault  on  the  part  of  the  employer,  the  question 
immediately  ai'ises  as  to  whether  this  deprivation  is  not  an 
invasion  of  the  constitutional  rights  of  the  employer,  for  such 


CONSTITUTIONALITY  111 

a  liability  is  essentially  a  deprivation  of  property,  and  it  is 
an  arbitrary  dejDrivation  in  that  it  fixes  this  absolute  liability 
on  the  employer  without  any  fault  on  his  part  and  with  no 
opportunity  to  protect  himself  from  the  carelessness  of  the 
injured  employee.  It  is  one  of  the  established  principles  of 
English  and  American  constitutional  government,  protected 
by  written  constitutional  guarantees  in  the  United  States,  that 
no  person  shall  be  deprived  of  his  property  without  due  pro- 
cess of  law,  and  in  the  application  of  this  principle  to  this 
situation  the  issue  is  as  to  whether  this  absolute  liability  of 
the  employer  is  not  an  invasion  of  this  constitutional  right. 
It  may  be  difficult  to  frame  a  comprehensive  definition  of 
this  expression  "due  process  of  law,"  or  its  synonym  "law  of 
the  land,"  or  any  other  expression  which  may  be  applied  to 
this  constitutional  privilege,  but  it  may  be  said  as  a  general 
proposition  that  when  any  claim  is  made  against  a  party 
which  involves  a  deprivation  of  property  that  party  is  en- 
titled to  have  the  claim  passed  upon  by  the  judicial  authori- 
ties. In  the  application  of  this  principle  to  the  law  of  em- 
ployers' liability  the  procedure  which  had  become  established 
was  that  when  an  employee  made  claim  against  his  employer 
for  injuries  alleged  to  have  been  sustained  during  the  course 
of  his  employment  by  reason  of  the  negligence  of  the  em- 
ployer, and  the  employer  denied  this  allegation  of  negligence 
on  his  part,  he  was  entitled  to  have  this  issue  passed  upon  by 
a  jury  before  judgment  could  be  entered  against  him  on  the 
claim.  The  situation,  therefore,  involved  the  right  of  trial 
by  jury,  which  was  an  established  institution  of  the  common 
law  system  as  an  essential  incident  of  this  constitutional 
guarantee  of  due  process  of  law.  The  fundamental  question, 
then,  in  determining  upon  the  authority  of  the  legislature  to 
pass  a  law  which  would  at  the  same  time  establish  the  absolute 
liability  of  the  employer  for  all  occupational  injuries  and 


112  WOKKMEN'S  COMPENSATION 

deprive  him  of  the  right  of  a  trial  by  jury  to  pass  upon  the 
issue  of  his  liability,  was  as  to  whether  or  not  the  establish- 
ment of  such  a  liability  was  due  process  of  law  within  the 
meaning  of  the  state  and  federal  constitutions. 

It  may  be  noted  that  in  the  consideration  of  this  question 
j  the  courts  have  distinguished  between  negligence  on  the  part 
of  the  injured  which  did  not  involve  any  wilfulness  or  in- 
tention to  produce  injury  and  that  which  did  involve  such 
wilfulness  or  intentional  negligence,  and  that  the  constitu- 
tionality of  a  voluntary  compensation  law  which  removed 
the  defence  of  contributory  negligence  from  employers  who 
failed  to  accept  it,  but  preserved  the  conmion  law  rights  of 
the  employer  in  cases  where  the  employee  was  injured  by 
reason  of  his  serious  and  wilful  misconduct  has  been  upheld. 
It  seems,  therefore,  that  for  compensation  purposes  this  de- 
fence assumes  two  different  aspects,  depending  upon  whether 
or  not  the  element  of  wilful  or  intentional  negligence  is 
present,  and  that  the  defence  may  be  removed  if  it  does  not 
go  to  the  extent  of  depriving  the  employer  of  his  common  law 
rights  in  cases  where  injuries  are  intentionally  inflicted  upon 
himself  by  an  employee. 

Another  constitutional  objection,  but  one  which  must  be 
classed  as  of  a  minor  nature  because  it  is  not  general  but  is 
limited  in  its  application,  which  may  be  interposed  in  some 
states  to  a  compensation  law  which  applies  to  fatal  injuries  is 
the  fact  that  the  state  constitution  may  prohibit  the  legisla- 
ture from  setting  any  limit  to  the  amount  of  damages  which 
may  be  assessed  in  fatal  cases.  This  objection  is  not  valid 
unless  there  is  some  such  constitutional  limitation,  for  in  the 
first  place  the  right  of  the  dependents  or  of  the  personal 
representatives  to  recover  in  fatal  cases  is  not  a  common  law 
right  but  one  granted  by  statute,  and  then  when  the  legisla- 
ture grants  the  right  it  may  place  any  limit  on  the  recovery 


CONSTITUTIONALITY  113 

that  is  deemed  advisable,  but  if  either  the  right  to  recover 
or  the  amount  of  recovery  is  regulated  by  the  constitution  it 
is  beyond  the  power  of  the  legislature  to  interfere  with  such 
constitutional  provisions. 

The  various  attempts  which  were  made  to  establish  com- 
pensation systems  in  the  different  states  during  the  first 
decade  of  the  twentieth  century  were  failures.  The  Mary- 
land, Montana,  and  New  York  laws,  which  established  the 
compensation  principle  as  to  certain  industries  in  those  states 
were  declared  unconstitutional,  and  the  laws  which  were 
passed  in  Massachusetts  and  New  York  permitting  the  estab- 
lishment of  compensation  systems  by  voluntary  agreement 
were  rendered  inoperative  because  of  the  failure  of  employers 
and  employees  to  come  under  the  provisions  of  the  laws.  The 
experience  during  this  period,  therefore,  taught  two  lessons: 
first,  that  the  constitutional  objections  to  the  system  must 
be  overcome;  and  second,  that  if  a  compulsory  system  could 
not  be  established  constitutionally,  any  system  that  was  estab- 
lished which  miffht  in  theorv  be  voluntarv  must  in  fact  con- 
tain  such  elements  of  compulsion  to  elect  the  provisions  of 
the  law  that  it  would  be  manifestly  for  the  interests  of  both 
employers  and  employees  to  come  within  the  system  rather 
than  stand  on  their  common  law  rights.  The  leading  cases 
which  passed  upon  the  constitutionality  of  compensation  legis- 
lation will  be  reviewed  briefly  in  this  chapter,  and  the  means 
which  were  devised  to  establish  a  system  which  is  voluntary 
in  theory  but  is  practically  compulsory  in  fact  will  be  noted. 

The  law  which  established  the  Co-operative  Insurance 
Fund  in  Maryland,  Chapter  139,  of  the  Acts  of  1902,  was 
declared  unconstitutional  in  1904.  The  decision  was  ren- 
dered in  the  Court  of  Common  Pleas  of  Baltimore  and  no 
appeal  was  taken  from  it,  so  the  court  of  last  resort  in  Mary- 
land did  not  have  an  opportunity  to  pass  on  the  question. 


114  WORKMEN'S  COMPENSATION 

The  case  is  that  of  Franklin  v.  The  United  Railways  and 
Electric  Co.,  and  the  opinion  can  be  found  in  Bulletin  No. 
57  of  the  Bureau  of  Labor  (Washington),  page  689.  It 
was  a  suit  brought  by  an  injured  employee  against  the  de- 
fendant for  injuries  sustained  during  the  course  of  his  em- 
ployment, and  the  defendant  pleaded  as  a  defence  that  it 
was  a  contributor  to  the  Co-operative  Insurance  Fund,  to 
which  defence  the  plaintiff  demurred  on  the  ground  that  the 
law  establishing  the  fund  was  unconstitutional,  and  the  de- 
murrer was  sustained. 

The  court  held  that  in  the  establishing  of  the  fund  and 
vesting  of  plenary  powers  as  to  its  administration  in  the  In- 
surance Commissioner  it  might  be  argued  that  the  law  was 
constitutional  if  it  had  been  confined  in  its  operation  to 
those  who  had  no  remedy  prior  to  its  establishment,  but  that 
inasmuch  as  its  application  was  general,  including  cases  where 
the  employer  was  liable  as  well  as  those  in  which  he  was 
not  liable,  it  violated  the  provision  of  the  constitution 
which  preserved  the  right  of  trial  by  jury  and  that  which 
gave  to  everyone  a  remedy  by  due  process  of  law  for  any 
injury  done  to  him.  This  decision  is  more  interesting  than 
valuable,  for  the  law  in  itself  was  extremely  limited  in  its 
application,  and  it  was  wholly  optional  with  the  employers 
to  whom  it  did  apply  as  to  whether  or  not  they  should  elect 
to  come  within  its  provisions,  and  as  this  case  was  decided  by 
an  inferior  court  it  is  of  little  value  as  a  precedent,  but  it  is 
worthy  of  note  because  of  its  historical  position. 

The  Montana  statute  which  established  the  "Employers' 
and  Employees'  Co-operative  Insurance  and  Total  Permanent 
Disability  Fund,"  Chapter  67,  Laws  of  1909,  was  declared 
unconstitutional  in  the  case  of  Cunningham  v.  Northwestern 
Improvement  Co.,  44  Montana,  180;  119  Pacific,  554.  This 
was  a  proceeding  brought  by  the  plaintiff,  who  was  State 


CONSTITUTIONALITY  115 

Auditor,  to  recover  from  the  defendant,  a  corporation  en- 
gaged in  the  business  of  operating  coal  mines  and  coal  wash- 
ers, the  assessment  for  which  it  was  liable  for  the  support  of 
the  fund.  The  case  was  submitted  to  the  District  Court  on 
an  agreed  statement  of  facts  which  raised  the  question  of  the 
constitutionality  of  the  statute,  and  a  judgTaent  rendered  in 
favour  of  the  plaintiff;  an  appeal  was  taken  from  this  de- 
cision to  the  Supreme  Court  and  the  judgment  was  reversed 
and  the  case  was  remanded  with  directions  to  enter  a  judg- 
ment for  the  defendant,  on  the  gi-ound  that  the  statute  was 
unconstitutional. 

Several  different  reasons  were  assigned  why  it  was  alleged 
that  the  law  was  unconstitutional,  the  principal  of  which 
were  that  it  was  not  an  exercise  of  the  police  power,  that  it 
violated  the  constitutional  guarantee  of  trial  by  jury,  that 
it  operated  to  take  property  without  due  process  of  law,  and 
that  it  deprived  the  employer  of  the  equal  protection  of 
the  laws.  The  court  held  that  the  act  was  an  exercise  of  the 
police  power,  and  that  it  was  within  the  power  of  the  legis- 
lature to  establish  such  an  industrial  insurance  system  if  it 
was  deemed  necessary.  It  held  that  the  right  of  trial  by 
jury  was  not  violated,  and  that  none  of  the  provisions  of  the 
law  were  in  conflict  with  the  constitutional  inhibition  against 
the  deprivation  of  property  without  due  process  of  law.  It 
may  be  noted,  however,  that  the  reasoning  of  the  court  in 
disposing  of  these  two  objections  is  open  to  question.  The 
fatal  constitutional  objection  in  the  opinion  of  the  court  was 
that  the  statute  deprived  the  employer  of  the  equal  pro- 
tection of  the  laws,  in  that  it  afforded  him  no  immunity  from 
suit  and  liability  to  pay  a  judgment  if  an  injured  employee 
elected  to  sue  rather  than  receive  the  benefits  of  the  fund. 
The  obligation  on  the  part  of  the  employer  to  contribute  to 
the  fund  was  absolute,  but  he  also  might  be  compelled  to 


116  WORKMEN'S  COMPENSATION 

defend  a  suit  and  pay  damages  after  he  had  contributed  to 
the  fund,  hence  the  act  was  invalid  because  it  did  not  afford 
the  employer  the  equal  protection  of  the  laws. 

The  compulsory  compensation  law  of  New  York,  Chapter 
674,  Laws  of  1910,  which  went  into  effect  on  September  1, 
1910,  was  declared  unconstitutional  in  the  case  of  Ives  v. 
South  Buffalo  Ry.  Co.,  201  N.  Y.  271 ;  94  N.  E.,  431 ;  on 
March  24,  1911.  This  case  is  one  of  the  most  important 
compensation  decisions  in  the  United  States.  The  New  York 
law  which  it  overthrew  applied  to  several  classes  of  occupa- 
tions which  were  deemed  extra-hazardous,  and  was  general  in 
its  application  as  to  those  occupations.  It  had  been  passed 
after  a  long  and  careful  investigation  by  a  Commission  on 
which  all  parties  who  were  interested  in  the  enactment  of  such 
legislation  were  represented.  Doubts  had  been  expressed  all 
along  as  to  its  constitutionality,  and  so  the  question  was 
raised  and  decided  with  as  little  delay  as  possible.  The  case 
in  which  it  was  raised  was  one  in  which  the  plaintiff'  sought  to 
recover  the  benefits  provided  in  the  law  from  the  defendant 
for  disability  by  injuries  sustained  during  the  course  of  his 
employment,  by  one  of  the  risks  of  the  employment.  The 
answer  of  the  defendant  admitted  all  of  the  allegations  of  the 
plaintiff's  complaint,  but  raised  the  question  of  the  constitu- 
tionality of  the  law.  To  this  answer  the  plaintiff"  demurred 
and  so  the  issue  was  raised.  The  Appellate  Division  of  the 
Supreme  Court  sustained  the  demurrer,  and  an  appeal  was 
taken  to  the  Court  of  Appeals,  where  the  decision  was 
reversed  and  judgment  entered  for  the  defendant  on  the 
ground  that  the  law  was  unconstitutional. 

Several  specifications  were  made  as  to  why  it  was  claimed 
that  the  law  was  in  violation  of  the  constitution,  the  princi- 
pal of  which  were  the  classification  of  occupations,  by  which 
some  industries  were  made  subject  to  the  operation  of  the 


CONSTITUTIONALITY  117 

law  while  others  were  not ;  the  fact  that  the  right  of  trial  by 
jury  was  taken  away;  and  the  allegation  that  the  establish- 
ment of  an  absolute  liability  on  the  part  of  an  employer 
was  a  deprivation  of  property  without  due  process  of  law. 
The  court  overruled  the  objection  based  on  the  classification 
of  occupations,  holding  that  such  classification  was  a  proper 
exercise  of  legislative  discretion  as  long  as  it  was  uniform 
and  applicable  alike  to  all  who  were  within  the  classes  speci- 
fied. There  was  a  difference  of  opinion  among  the  members 
of  the  court  on  the  question  as  to  whether  or  not  the  law  was 
in  conflict  with  the  constitutional  provisions  regarding  trial 
by  jury,  and  as  a  decision  on  this  point  was  unnecessary  the 
court  did  not  attempt  to  decide  it.  The  court  held  that  the 
law  was  unconstitutional  because  "in  its  basic  and  vital 
features  the  right  given  to  the  employee  by  this  statute  does 
not  preserve  to  the  employer  the  'due  process'  of  law  guaran- 
teed by  the  constitution,  for  it  authorises  the  taking  of  the 
employer's  property  without  his  consent  and  without  his 
fault."  The  court  was  unanimous  in  the  decision  on  this 
point. 

The  Supreme  Court  of  Washington  later  in  the  same  year, 
on  September  27,  1911,  in  the  case  of  State  ex  rel.  Davis- 
Smith  Co.  V.  Clausen,  65  Wash.  156;  117  Pacific,  1101; 
upheld  the  constitutionality  of  an  act  of  the  Washington 
Legislature,  Chapter  74,  Laws  of  1911,  which  was  similar 
in  principle  to  the  statute  overthrown  by  the  New  York  Court 
of  Appeals.  This  law  was  a  compulsory  compensation  law 
applicable  to  certain  enumerated  extra-hazardous  employ- 
ments, which  established  a  state  controlled  fund  for  the  in- 
surance of  the  compensation  obligation.  The  same  general 
objections  were  raised  to  this  law  that  were  raised  to  the 
New  York  law.  The  court  overruled  all  of  these  objections, 
holding  that  the  law  was  a  proper  exercise  of  the  police  power. 


118  WOEKMEN'S  COMPENSATION 

that  it  did  not  violate  the  right  of  trial  by  jury  guaranteed 
by  the  .constitution,  and  that  it  was  not  a  deprivation  of 
property  without  due  process  of  law.  The  court  noted  the 
decision  of  the  New  York  Court  of  Appeals  in  the  Ives  case, 
and  stated  that  it  was  unable  to  yield  consent  to  the  view 
there  taken. 

The  decision  of  the  court  was  unanimous,  but  there  are 
indications  that  there  might  have  been  a  dissent  if  one  of 
the  justices  had  considered  that  the  issue  of  the  constitution- 
ality of  this  legislation  was  fairly  and  properly  before  the 
court  for  decision.  The  case  as  presented  did  not  involve 
the  rights  or  obligations  of  any  employer  or  employee  under 
the  law.  It  w^as  a  mandamus  proceeding  to  compel  the  State 
Auditor  to  issue  a  warrant  on  the  State  Treasurer  in  payment 
of  an  obligation  incurred  by  the  Industrial  Insurance  Depart- 
ment in  the  execution  of  the  law,  but  for  purposes  collateral 
to  its  main  object.  The  majority  of  the  court  held  that  the 
issue  of  the  constitutionality  of  the  statute  could  be  raised 
in  this  proceeding,  and  that  it  was  properly  before  them  for 
decision,  but  Justice  Chadwick  stated  in  a  concurring  opinion 
that  the  case  was  a  "moot  case,  pure  and  simple,  and  that 
the  right  of  the  relator  to  recover  is  in  no  way  affected  by  the 
constitutional  questions  raised  by  the  parties  and  discussed 
by  the  court."  It  is  to  be  regretted,  therefore,  that  the  issue 
decided  was  not  clearly  and  directly  before  the  court,  for 
although  the  result  would  have  been  the  same  in  that  the  law 
would  have  been  upheld,  possibly  by  a  divided  court,  the 
decision  would  have  been  entitled  to  greater  prestige  if  it 
had  not  been  made  on  a  collateral  issue. 

In  the  meantime  a  device  had  been  evolved  which  was  to 
become  the  basis  of  the  compensation  legislation  in  the  United 
States,  that  would  stand  the  test  of  constitutionalitv.  It  is 
yet  too  early  to  predict  whether  or  not  this  will  be  the  per- 


COI^STITUTIONALITY  119 

manent  basis  of  our  compensation  legislation,  but  it  is  tbe 
basis  on  which  the  laws  in  the  greater  number  of  the  states 
now  rest  and  it  is  peculiar  to  this  nation  because  of  our  con- 
stitutional situation,  and  so  it  is  distinctively  American.  It 
is  the  principle  of  elective  or  optional  compensation,  and 
is  in  fact  but  an  extension  of  the  principle  which  had 
already  been  permitted  by  law  in  Massachusetts  and  New 
York,  but  it  is  in  practice  effective  while  those  laws  were 
ineffective  because  while  in  form  voluntary  it  penalises  the 
employers  and  employees  to  such  an  extent  for  failure  to  elect 
compensation  that  it  appears  that  it  is  manifestly  to  the 
advantage  of  both  to  elect  the  provisions  of  the  system.  Thus 
at  one  stroke  the  constitutional  objections  to  a  compensation 
system  are  eliminated,  and  the  election  is  made  so  attractive 
to  the  interested  parties  in  comparison  with  a  failure  or 
refusal  to  elect  that  the  defects  in  a  system  which  is  wholly 
voluntary  and  carries  no  penalties  for  a  failure  to  elect  are 
obviated. 

This  principle  was  first  adopted  in  the  legislation  which 
was  passed  in  1911.  In  that  year  several  states  passed  com- 
pensation laws  which  embodied  the  idea  of  elective  compensa- 
tion, but  which  in  effect  made  it  practically  compulsory  for 
both  employers  and  employees  to  elect  the  law,  and  the  prin- 
ciple upon  which  those  laws  are  based  has  with  a  single 
exception  stood  the  test  of  constitutionality.  The  basis  of 
the  principle  is  that  it  is  left  optional  with  both  employers 
and  employees  as  to  whether  they  shall  accept  the  provisions 
of  the  law.  If  an  employer  does  not  elect  to  pay  compensa- 
tion according  to  the  terms  of  the  law  the  defences  of  assump- 
tion of  risk,  contributory  negligence,  and  the  fellow-servant 
defence,  are  removed  and  are  not  available  in  bar  of  any 
claim  which  an  employee  may  bring  against  him  for  an 
occupational  injury ;  if  in  turn  the  employee  rejects  the  bene- 


120  WOEKMEN'S  COMPENSATION 

fits  of  the  law  after  an  employer  has  accepted  it  the  employer 
has  the  right  to  establish  any  of  the  common  law  defences 
in  bar  of  a  claim  which  may  be  made  by  the  employee  for 
injuries  received  during  the  course  of  his  employment. 

The  adoption  of  this  principle  has  been  criticised  as  a 
piece  of  legislative  trickery,  in  that  the  election  while  in 
theory  voluntary  is  in  fact  compulsory,  for  with  the  defences 
removed  from  the  employer  practically  the  only  element  re- 
maining when  a  claim  is  made  against  him  by  an  injured 
employee  is  that  of  the  assessment  of  damages,  and  with  the 
defences  still  available  against  an  employee  who  fails  to  elect 
that  employee  when  injured  would  have  to  prove  his  case  and 
establish  the  liability  of  the  employer  in  accordance  with  all 
of  the  common  law  rules,  so  the  employee  by  electing  to  abide 
by  the  provisions  of  the  law  may  be  compelled  to  forego  valu- 
able rights  in  cases  where  he  may  be  injured  by  the  negligence 
of  the  employer  for  the  much  smaller  benefits  specified  in 
the  compensation  law.  The  result  was,  however,  that  this 
elective  system  was  recognised  as  a  practical  and  feasible 
method  of  relief  from  the  defects  of  the  common  law  system, 
and  as  the  constitutionality  of  the  principle  was  upheld  the 
spread  of  such  laws  was  rapid  and  they  were  accepted  gen- 
erally by  those  subject  to  their  provisions. 

While  the  voluntary  compensation  law  was  pending  in  the 
Massachusetts  General  Court,  after  it  had  passed  the  House 
and  had  been  sent  to  the  Senate  for  action,  the  Senate  called 
upon  the  Justices  of  the  Supreme  Judicial  Court  for  their 
opinion  as  to  the  constitutionality  of  this  legislation.  The 
Justices  submitted  an  opinion  in  response  to  this  request  in 
which  they  stated  that  they  believed  that  the  proposed  law 
was  a  valid  exercise  of  legislative  power.  Opinion  of  the 
Justices,  209  Mass.  607;  96  IST.  E.,  398.  Two  questions 
were  submitted:  first,  as  to  whether  or  not  the  bill  was  in 


COKSTITUTIOXALITY  121 

conformity  with  the  constitutional  provision  forbidding  the 
deprivation  of  property  without  due  process  of  law ;  and  sec- 
ond, as  to  whether  or  not  the  bill  was  in  conformity  to  the 
Fourteenth  Amendment  to  the  Constitution  of  the  United 
States.  Both  of  these  questions  were  answered  in  the  affirm- 
ative. In  their  opinion  in  considering  the  removal  of  the 
defences  the  Justices  distinguished  between  contributory  neg- 
ligence as  the  tei-m  is  ordinarily  used  and  negligence  which 
amounts  to  serious  or  wilful  misconduct  on  the  part  of  the 
employee,  and  they  held  that  the  law  would  be  constitutional 
on  the  assumption  that  the  defence  removed  in  event  of  the 
failure  of  the  employer  to  elect  the  law  was  the  defence  of 
contributory  negligence  in  its  usual  meaning.  They  ex- 
pressed no  opinion  as  to  the  constitutionality  of  the  law  if 
this  tei*m  was  otherwise  construed.* 

1  The  provision  in  the  Constitution  of  Massachusetts  by  virtue  of 
which  the  Justices  of  the  Supreme  Court  can  be  called  upon  to  express 
opinions  in  matters  which  are  not  in  litigation  is  not  a  general  con- 
stitutional provision,  but  is  confined  to  the  Constitution  of  Massachu- 
setts and  a  very  few  other  states,  and  it  is  a  well  recognised  rule 
that  the  judiciary  cannot  be  called  upon  to  give  such  opinions  except 
by  the  authority  of  such  a  constitutional  provision.  In  the  Massa- 
chusetts Constitution  the  provision  appears  in  Chapter  III,  and  is  as 
follows : 

"Section  II.  Each  branch  of  the  legislature,  as  well  as  the  governor 
and  council,  shall  have  authority  to  require  the  opinions  of  the  justices 
of  the  supreme  judicial  court,  upon  important  questions  of  law,  and 
upon  solemn  occasions." 

While  these  opinions  do  not  have  the  same  weight  as  decisions  ren- 
dered in  the  determination  of  cases  in  litigation,  still  they  are  entitled 
to  respect  when  the  opinions  expressed  are  apparently  sound  conclusions 
of  law.  The  courts  do  not  regard  them  as  of  any  binding  authority, 
and  so  do  not  hesitate  to  re\aew  in  actual  litigation  any  questions 
upon  which  they  may  have  expressed  an  opinion  in  conformity  with 
this  constitutional  provision,  but  it  is  a  significant  fact  that  when 
such  questions  arise  in  litigation  after  such  an  opinion  has  been  given 
that  the  decision  is  usually  in  harmony  with  the  opinion.  Note  the 
case  of  Young  v.  Duncwn,  and  Madden's  case,  cited  in  this  chapter. 


122  WORKMEN'S  COMPEN-SATIOTq" 

The  issue  of  tlie  constitutionality  of  the  Massachusetts 
law  was  later  raised  in  actual  litigation  in  the  case  of  Youiig 
V.  Duncan,  218  Mass.  346 ;  106  N.  E.,  1 ;  and  in  Maddens 
case,  222  IMass.  487;  111  N.  E.,  3Y9,  and  the  law  was  up- 
held in  both  cases.     In  the  case  of  Young  v.  Duncan  the 
plaintiff,  an  injured  employee,  attempted  to  recover  at  com- 
mon law  after  a  decree  for  compensation  had  been  entered 
at  the  instance  of  the  employer,  the  basis  of  her  claim  at 
common  law  being  the  allegation  that  the  employer  had  not 
accepted  the  compensation  law  in  accordance  with  the  for- 
malities  required,    and   that   the   law   was  unconstitutional. 
It  was  held  that  the  employer  had  duly  accepted  the  law 
as  far  as  the  rights  of  the  employee  were  concerned,  and 
that  the  law  was  constitutional.     The  court  referred  to  the 
Opinion  of  the  Justices,  supra,  which  had  been  given  while 
the  bill  was  pending,  and  stated  that  that  opinion  was  merely 
advisory  in  character  and  proceeded  to  examine  the  ques- 
tion of  the  constitutionality  of  the  act  in  the  light  of  the 
argument  in  this  case.     This  issue  was  also  raised  in  Mad- 
den's  case,  and  it  was  held  that  the  act  was  not  a  deprivation 
of  property  without  due  process  of  law  because  it  was  wholly 
optional  with  the  employer,  as  it  was  with  the  employee,  as 
to  whether  or  not  he  should  come  within  the  provisions  of 
the  act  or  stay  outside  of  it  and  stand  on  his  legal  rights. 

The  question  of  the  constitutionality  of  the  elective  com- 
pensation law  of  Wisconsin,  Chapter  50,  Laws  of  1911,  was 
brought  before  the  Supreme  Court  of  that  state  in  the  case 
of  Borg7iis  v.  Folk;  147  Wis.  327;  133  N.  W.,  209;  and  the 
court  decided  in  favour  of  the  validity  of  the  law.  This 
was  an  action  brought  by  certain  employees  against  their 
employer  to  restrain  him  from  electing  to  operate  under 
the  law  during  the  contracts  of  employment  of  the  com- 
plainants, and  although  this  specific  issue  might  have  been 


CONSTITUTIOI^ALITY  123 

disposed  of  without  any  decision  as  to  the  constitutionality 
of  the  law,  in  view  of  the  exigency  the  court  held  that  this 
question  could  be  properly  raised  in  this  case  and  proceeded 
to  pass  upon  it.  The  court  held  that  the  law  was  not  un- 
constitutional in  depriving  employers  who  failed  to  elect  it 
of  their  common  law  defences,  because  those  defences  were 
simply  rules  of  the  common  law  which  were  guarded  by  no 
constitutional  provisions.  It  was  also  held  that  the  law 
was  not  unconstitutional  as  a  deprivation  of  property  with- 
out due  process  of  law. 

Decisions  have  been  rendered  in  several  other  states  in 
which  voluntary  compensation  laws  were  held  to  be  consti- 
tutional, but  as  these  decisions  were  based  on  the  same 
grounds  as  those  in  the  Massachusetts  and  Wisconsin  cases 
their  citation  would  only  be  cumulative.  The  principle 
upon  which  the  laws  have  been  upheld  is  that  they  authorise, 
in  theory  at  least,  a  voluntary  contractual  relation  between 
the  employer  and  his  employees  to  substitute  this  system  for 
the  common  law  system,  and  that  in  the  removal  of  the  de- 
fences from  the  employer  if  he  does  not  see  fit  to  elect  the 
system  the  legislature  is  interfering  with  none  of  his  con- 
stitutional rights ;  the  situation  of  the  employee,  however, 
in  relation  to  his  existing  rights,  is  not  altered  by  his  failure 
or  refusal  to  elect  the  law,  for  it  simply  leaves  those  defences 
available  against  him  in  any  action  that  he  may  bring  which 
were  already  available  against  him. 

While  there  is  no  uniformity  in  the  different  laws  as  to 
the  manner  of  election  by  the  employer,  there  is  substantial 
uniformity  in  principle  in  that  election  must  usually  be 
effected  by  some  affirmative  act  on  his  part,  such  as  the  filing 
of  notice  of  election  with  some  state  official,  or  if  the  elec- 
tion is  implied  it  must  be  consummated  and  evidenced  by 
some  affirmative  act,  such  as  the  insurance  of  the  compensa- 


124  WOKKMEN'S  COMPENSATION 

tion  obligation  as  required  by  the  law,  the  posting  of  no- 
tices of  election  in  his  working  places,  or  by  some  other  for- 
mality. The  general  jDrinciple  which  runs  through  the  laws 
is  that  after  the  employer  has  elected  the  law  by  compliance 
with  the  required  formalities  the  employee  is  held  to  have 
elected  by  implication  unless  he  files  notice  of  rejection  in 
the  manner  prescribed  in  the  law.  This  method  of  election 
passed  unchallenged  until  the  Kentucky  law,  Chapter  73, 
Laws  of  1914,  was  declared  unconstitutional  by  the  Court 
of  Appeals  of  Kentucky  in  the  case  of  Kentucky  State  Jour- 
nal V.  Workme7i's  Compensation  Board,  161  Ky.  562;  170 
S.  W.,  1166. 

The  Kentucky  law  was  a  voluntary  compensation  law, 
under  which  the  election  of  both  employer  and  employee  was 
by  implication,  but  after  electing  the  law  the  employer  was 
obliged  to  post  notices  in  order  to  advise  the  employees  of 
his  election  and  give  them  the  opportunity  to  reject  if  they 
desired  to  do  so.  The  situation  in  Kentucky  was  somewhat 
different  from  that  in  some  of  the  other  states,  because  of 
Section  54  in  the  state  Constitution  which  prohibited  the 
General  Assembly  from  placing  any  limit  on  the  amount  of 
recovery  for  injuries  resulting  in  death,  or  for  injuries  to 
person  or  property,  and  Section  241  which  provided  that  in 
every  case  of  injury  by  negligence  or  wrongful  act  the  in- 
jured should  have  a  right  to  recover  damages  from  the 
person  causing  the  injury.  The  case  in  which  the  constitu- 
tionality of  the  law  was  raised  and  determined  was  a  man- 
damus proceeding  brought  by  the  Workmen's  Compensation 
Board  against  the  Kentucky  State  Journal  Co.  to  compel 
that  company  to  file  certain  returns  required  by  the  law. 
A  demuiTer  to  the  petition  was  filed  on  the  ground  that  the 
law  was  unconstitutional,  but  this  demurrer  was  overruled 
in  the  Circuit  Court  and  an  appeal  taken  to  the  Court  of 


CONSTITUTIONALITY  125 

Appeals,  where  the  law  was  declared  unconstitutional  by  a 
divided  court,  four  of  the  Justices  holding  against  the  law 
and  three  in  favour  of  it. 

The  law  was  held  unconstitutional  on  the  ground  that  the 
election  which  was  in  theory  voluntary  was  in  effect  com- 
pulsory for  both  employer  and  employee,  and  as  such  was  a 
deprivation  of  property  without  due  process  of  law.  It  was 
also  held  that  the  law  was  in  conflict  with  both  Section  54 
and  Section  241  of  the  Constitution  of  Kentucky.  The  court 
observed  that  it  was  within  the  power  and  right  of  an  em- 
ployee to  waive  by  contract  the  provisions  of  Section  54, 
prohibiting  any  limit  on  the  amount  of  recovery,  if  the  con- 
tract was  freely  and  voluntarily  made,  but  the  acceptance 
of  the  law  by  implication  was  not  such  a  voluntary  contract. 
That  part  of  the  law  which  limited  the  right  of  compensa- 
tion in  fatal  cases  to  surviving  dependents  was  in  violation 
of  Section  241,  which  allowed  such  actions  to  be  prosecuted 
by  the  personal  representative  of  the  deceased,  for  it  was  held 
that  the  Legislature  had  no  right  to  limit  the  recovery  for 
the  death  of  an  employee  by  the  negligence  of  the  employer 
to  the  dependents  of  the  deceased  employee. 

When  any  provision  appears  in  a  state  constitution  lim- 
iting the  power  of  the  legislature  to  place  any  restrictions  on 
the  amount  of  recovery  for  death  resulting  from  wrongful 
act,  such  as  that  in  the  Constitution  of  Kentucky,  it  places 
a  limitation  on  the  passage  of  any  compulsory  compensation 
law  which  shall  apply  to  fatal  cases,  so  when  the  compulsory 
law  of  Oklahoma,  Chapter  246,  Laws  of  1915,  was  passed, 
it  was  specially  provided.  Article  VI,  Section  1,  that  the 
law  should  not  apply  to  accidental  injuries  which  resulted 
in  death.  This  was  because  of  a  provision  in  the  Constitu- 
tion of  Oklahoma,  Article  XXIII,  Section  7,  which  prohib- 
ited the  Legislature  from  placing  any  limitation  on  such  re- 


126  WORKMEN'S  COMPENSATION 

covery.  The  Oklahoma  haw,  therefore,  as  it  now  stands  ap- 
plies only  to  non-fatal  injuries,  but  by  a  Joint  Resolution, 
approved  March  15,  1915,  the  Legislature  of  Oklahoma  pro- 
posed an  amendment  to  the  Constitution  of  the  State  which 
would  amend  this  constitutional  pro\asion  so  that  the  com- 
pensation law  could  be  made  applicable  to  fatal  as  well  as  to 
non-fatal  injuries. 

In  several  of  the  states  provisions  have  been  inserted  in 
the  constitutions  authorising  the  legislature  to  pass  a  com- 
pulsory compensation  law.  Such  provisions  have  relieved 
the  situation  as  far  as  any  conflicts  between  compulsory  laws 
and  other  provisions  of  the  state  constitutions  are  concerned, 
but  it  has  been  regarded  as  doubtful  as  to  whether  those 
provisions  were  not  in  conflict  with  the  Constitution  of  the 
United  States.^  The  basis  of  this  contention  was  that  the 
Fifth  Amendment  protected  the  deprivation  of  property 
without  due  process  of  law,  the  Seventh  Amendment  pre- 
served the  right  of  trial  by  jury,  and  the  Fourteenth  Amend- 
ment prohibited  any  state  from  abridging  the  privileges  or 
immunities  of  citizens  of  the  United  States.  There  seemed 
to  be  some  doubt,  therefore,  as  to  the  validity  of  these  pro- 
visions in  the  state  constitutions,  but  this  issue  has  recently 
been  determined  by  the  Supreme  Court  of  the  United  States 
in  favour  of  the  validity  of  such  provisions. 

This  decision  was  in  the  case  of  New  York  Central  Rail- 
road Co:  V.  White,  decided  on  March  6,  1917.     In  that  case 

1  The  general  tenor  of  these  constitutional  provisions  is  permissive, 
in  that  they  specify  that  the  different  legislatures  may  pass  compul- 
sory compensation  laws  rather  than  that  the  legislatures  shall  pass 
such  laws.  California,  Article  XX,  Section  21;  New  York,  Article  1, 
Section  19;  Ohio,  Article  II,  Section  35;  Pennsylvania,  Article  3,  Sec- 
tion 21;  Vermont,  Article  32.  In  some  states,  however,  these  pro- 
visions are  mandatory.  Arizona,  Article  XVIII,  Section  8;  Wyoming, 
Article  10,  Section  4. 


COISrSTITUTIOiNALITY  127 

the  validity  of  the  amendment  to  the  ISTew  York  constitution 
was  in  question.  The  New  York  courts  had  decided  in 
favour  of  the  amendment,  and  the  case  was  taken  to  the 
Supreme  Court  of  the  United  States.  This  court  decided 
that  the  compulsory  scheme  of  workmen's  compensation  was 
not  in  conflict  with  the  Fourteenth  Amendment,  and  that 
the  compulsion  to  insure  the  obligation  required  in  the  law 
was  a  valid  exercise  of  legislative  power.  On  the  same  day 
the  court  handed  down  decisions  in  two  other  compensation 
cases.  In  Mountain  Timher  Co.  v.  Washington,  the  validity 
of  the  compulsory  workmen's  compensation  and  state  insur- 
ance law  of  Washington  was  sustained,  and  in  Hawkins  v. 
Bleakly,  the  validity  of  the  elective  law  of  Iowa  was  sus- 
tained, so  it  appears  that  the  question  of  the  validity  of  the 
workmen's  compensation  principle,  whether  the  law  be  com- 
pulsory or  elective,  is  now  at  rest  because  of  the  action  of  the 
highest  court  in  the  land. 

A  number  of  different  compensation  laws  make  their  ap- 
plication depend  upon  the  number  of  employees  in  the  service 
of  an  employer,  the  law  applying  only  to  those  who  have 
a  specified  number  of  employees  or  over.  This  principle  of 
classification  according  to  the  number  of  employees  has  been 
attacked  as  unconstitutional,  but  it  was  upheld  by  the  Su- 
preme Court  of  the  United  States  in  the  case  of  Jeffery 
Manufacturing  Co.  v.  Blagg,  235  U.  S.  5Y1.  That  was  an 
action  brought  by  an  employee  against  an  employer  in  Ohio 
who  had  failed  to  elect  the  Ohio  Compensation  Law,  which 
applied  to  all  employers  who  employed  five  employees  or  more 
and  removed  the  common  law  defences  from  those  employ- 
ers who  were  subject  to  it  and  failed  to  accept  its  provisions. 
The  law  was  attacked  because  of  this  discrimination,  but  it 
was  held  that  the  classification  was  not  of  an  arbitrary  and 
unreasonable  nature  and  that  the  law  was  valid. 


128  WOKKMEN'S  COMPENSATION^ 

EEFERENCES 

The  cases  in  which  the  question  of  the  constitutionality  of 
compensation  laws  has  been  passed  upon  constitute  the  primary 
authority  in  this  matter,  and  several  of  the  principal  cases  have 
been  cited  in  this  chapter.  A  number  of  articles  and  discussions 
of  cases  have  appeared  in  the  different  law  reviews  from  time 
to  time,  and  the  reader  is  advised  to  consult  any  fdes  of  any  law 
reviews  that  may  be  available.  A  few  references  in  which  this 
question  has  been  discussed  are  given  herewith :  — 

Brief  of  Carmen  F.  Randolph,  New  York,  November,  1910. 
Printed  in  Senate  Document  No.  338,  62d  Congress,  3d 
Session,  (Report  of  the  Employers'  Liability  and  Workmen's 
Compensation  Commission),  pages  1395-1473. 

The  Constitutional  Problems  of  Workmen's  Compensation,  AV.  D. 
Lewis,  Risks  in  Modern  Industry,  page  119. 

Opinions  of  the  Courts,  Workmen's  Compensation  and  Employers' 
Liability,  Senate  Document  No.  475,  63d  Congress,  3d  Ses- 
sion. (This  is  a  compilation  of  the  different  workmen's 
compensation  cases  that  had  been  decided  at  the  time  that 
the  compilation  was  issued,  March,  1913.) 

Constitutional  Status  of  Workmen's  Compensation,  Ernest 
Freund,  American  Labor  Legislation  Review,  Vol.  II, 
page  43. 

The  Constitutionality  of  Workmen's  Compensation  and  Compul- 
sory Insurance  Laws,  M.  M.  Dawson,  33  Case  and  Comment, 
page  875. 

Compulsory  AVorkmen's  Compensation  Laws,  L.  C.  Williams,  23 
Case  and  Comment,  page  396. 


CHAPTER  VII 

COMPBNSATlOlSr    LEGISLATIOOSr    IN    THE    UNITED    STATES 

The  compensation  legislation  of  the  United  States  is  pe- 
culiar to  this  country.  While  the  agitation  for  the  adop- 
tion of  the  compensation  system  was  in  progress  extensive 
investigations  of  the  systems  in  operation  in  other  countries 
were  made  both  by  official  bodies  and  by  students  who  had 
no  official  connection  with  the  agitation,  in  order  to  get  the 
benefit  of  the  experience  of  the  other  countries  and  in  the 
endeavour  to  ascertain  whether  or  not  any  of  the  systems 
were  adaptable  in  whole  or  in  part  to  the  conditions  in  this 
country.  The  result  was  that  although  no  one  of  the  for- 
eign systems  was  adopted  as  a  whole  some  of  the  features 
of  several  different  systems  were  adopted,  so  that  while  our 
compensation  system  is  original  in  many  particulars,  and 
in  the  adaptation  of  the  features  which  it  has  adopted  from 
other  systems,  it  may  be  said  that  it  is  in  general  harmony 
with  the  system  as  adopted  in  the  other  nations. 

At  the  end  of  1916  compensation  laws  were  in  force  in 
two-thirds  of  the  states  of  the  United  States,  and  a  law  had 
been  passed  by  CongTess  establishing  a  compensation  system 
for  government  employees.  This  proportion  does  not  ex- 
press the  exact  situation,  for  although  it  shows  that  the 
greater  number  of  the  states  were  committed  to  the  com- 
pensation principle  it  does  not  in  itself  show  that  practically 
all  of  the  most  populous  states,  and  the  large  commercial,  in- 
dustrial and  manufacturing  states,  have  passed  those  laws, 

129 


130  WOEKMEN'S  COMPEITSATIOK 

so  that  by  far  the  larger  proportion  of  the  workingmen  of 
the  country  are  subject  to  the  operation  of  the  laws.  It 
may  be  said,  as  a  general  statement,  that  all  sections  of  the 
country  with  the  exception  of  the  south  are  committed  to  the 
principle.  While  some  of  the  southern  states  have  passed 
compensation  laws,  the  south  as  a  whole  has  not  adopted  the 
principle.  This  is  not  because  the  change  from  the  common 
law  system  has  met  with  any  more  opposition  in  the  south 
than  it  has  in  the  other  sections  of  the  country,  but  it  is 
due  to  the  fact  that  the  south  is  naturally  conservative  in 
matters  of  social  and  economic  reforms,  and  also  to  the  fact 
that  because  the  south  is  still  more  of  an  agricultural  than 
a  manufacturing  community  the  problem  of  the  liability  of 
the  employer  for  industrial  accidents  has  not  become  so  acute 
as  it  has  in  those  communities  where  manufacturing  interests 
predominate. 

The  rapidity  with  which  the  compensation  principle 
spread  is  easily  comprehended  when  it  is  noted  that  the  first 
laws  to  stand  the  test  of  constitutionality  were  passed  in 
1911,  and  that  within  a  period  of  less  than  six  years  the 
greater  number  of  the  states  had  passed  compensation  laws, 
so  that  territorially  the  larger  part  of  the  United  States  was 
under  compensation  and  numerically  the  larger  part  of  the 
population.  In  addition  to  this  action  on  the  part  of  the 
legislatures  in  the  different  states,  the  people  in  their  sover- 
eign capacity  in  some  of  the  states  had  incorporated  the  prin- 
ciple in  the  fundamental  law  by  adopting  constitutional  pro- 
visions which  either  permitted  or  commanded  the  legislature 
to  pass  compensation  laws.  The  different  compensation 
laws  have,  as  a  general  proposition,  been  accepted  in  the 
several  states  by  those  who  are  subject  to  their  operation  in 
a  spirit  of  willingness  to  give  the  system  a  fair  trial,  and 
with  minor  exceptions  it  may  be  stated  that  the  system  is 


LEGISLATION  m  THE  UNITED  STATES      131 

now  in  operation  nearly  all  over  the  United  States  as  a  prac- 
tical and  effective  system.^ 

It  has  already  been  noted  that  while  the  compensation 
legislation  in  this  country  is  in  harmony  with  the  general 
principles  of  the  workmen's  compensation  system  as  recog- 
nised in  the  civilised  world,  it  is  in  many  respects  peculiar 
to  itself.  This  is  because  the  system  in  one  country  may 
not  be  adapted  as  a  whole  to  the  conditions  in  another  coun- 
try, and  as  the  conditions  in  this  country  were  different  from 
those  in  other  countries  certain  changes  in  the  systems  in 
use  in  other  countries  were  necessary  before  any  system  could 
be  adopted  in  the  United  States.  The  experience  in  other 
countries  has  suggested  changes  in  the  system  which  might 
be  made  when  such  a  system  is  to  be  inaugurated  in  a  country 
which  has  not  hitherto  adopted  it,  and  so  many  variations 
were  made  in  the  existing  systems  when  the  system  came 
to  be  adopted  in  the  different  states  in  this  country. 

The  legal  situation  and  the  industrial  conditions  in  the 
United  States  bear  a  closer  resemblance  to  the  corresponding 
conditions  in  England  than  to  those  in  any  of  the  other 
countries  in  which  a  compensation  system  was  in  force  while 
the  agitation  was  in  progTess  in  this  country,  so  it  was  but 
natural  that  those  parts  of  the  English  system  which  were 
adaptable  to  this  country  should  be  adopted,  but  the  English 

1  New  Hampshire  is  practically  the  only  state  which  is  nominalh'  a 
compensation  state  but  is  in  reality  a  common  law  state.  This  is  be- 
cause the  compensation  law  is  ineflective,  and  this  condition  may  be 
attributed  to  one  of  two  causes,  either  that  those  who  drafted  the  law 
were  not  cognisant  of  the  principles  which  should  have  been  incorpor- 
ated in  it  in  order  to  make  it  effective,  or  that  they  were  cognisant  of 
those  principles  and  purposely  drew  a  law  which  would  be  ineffective. 
The  law  is  defective  in  several  essential  particulars.  The  employee  is 
allowed  to  elect  after  an  injury  whether  to  accept  compensation  or 
rely  on  his  common  law  rights,  and  this  defect  is  sufficient,  as  experi- 
ence has  shown,  to  render  any  compensation   law   inoperative. 


132  WORKMEN'S  COMPENSATION 

system  had  some  weaknesses  which  might  have  rendered  the 
system  nugatory  in  some  particulars  if  adopted  in  the  United 
States.  These  defects  could  be  corrected  by  borrowing  and 
adapting  some  of  the  features  of  the  German  system  and 
this  action  was  taken  in  drafting  many  of  our  laws,  so  that 
as  our  system  now  stands  it  may  be  said  that  it  is  an  adapta- 
tion of  the  English  and  German  systems.  As  to  form  and 
substantial  pro\dsions  many  of  the  laws  in  this  country  are 
based  on  the  English  law,  while  as  to  the  security  of  the 
compensation  obligation  and  the  administration  of  the  laws 
it  may  be  said,  as  a  general  proposition,  that  the  provisions 
of  a  number  of  our  laws,  particularly  those  which  make  in- 
surance compulsory  and  provide  special  administrative  ma- 
chinery, are  adapted  from  tlie  German  system. 

While  there  are  many  variations  as  to  the  details  of  the 
compensation  laws  in  the  different  states  the  general  prin- 
ciples which  run  through  the  laws  are  uniform,  and  it  is  on 
the  basis  of  the  principles  on  which  the  laws  rest  rather 
than  on  the  variations  in  the  details  that  the  general  propo- 
sition of  our  compensation  legislation  must  be  considered. 
The  classification  which  is  made  for  the  purpose  of  analysis 
of  the  compensation  legislation  in  the  United  States  is  along 
two  broad  and  general  lines,  and  is  according  to  the  nature 
of  the  laws  and  according  to  their  application. 

In  attempting  to  classify  the  laws  according  to  their  na- 
ture it  appears  that  there  are  two  general  classifications, 
those  which  are  compulsory  and  those  which  are  elective. 
Compulsory  laws  have  been  passed  in  the  states  in  which  the 
constitution  either  directs  or  permits  the  legislature  to  pass 
such  laws,  and  in  some  other  states  where  although  no  such 
constitutional  provision  exists  the  legislature,  in  the  exer- 
cise of  the  police  power,  has  assumed  the  authority  to  pass 
a  compulsory  law.     A  law  of  this  nature  leaves  no  option 


LEGISLATION  m  THE  UNITED  STATES      133 

with  the  employers  and  employees  who  are  subject  to  its 
operation  but  to  comply  with  its  provisions.  Certain  pen- 
alties are  usually  specified  for  employers  who  neglect  to 
comply  with  the  provisions  of  such  laws  in  order  that  their 
operation  may  be  eifective.  About  one-third  of  the  laws  are 
of  the  compulsory  type,  so  they  are  in  the  minority. 

The  greater  proportion  of  the  laws,  approximately  two- 
thirds  of  the  whole  number,  are  elective,  so  the  elective  law  is 
at  the  present  time  the  distinctive  national  type.  This  form, 
as  noted  in  the  preceding  chapter,  was  devised  to  obviate 
the  constitutional  objection  to  the  compulsory  law,  and  in 
its  historical  aspect  it  is  an  evolution  from  the  rule  of  the 
common  law  which  allowed  an  injured  employee  to  accept 
benefits  specified  in  a  pre-existing  agTcement  between  the 
employer  and  the  employee  in  lieu  of  damages.  The  next 
step  was  the  legislation  which  permitted  such  an  agTeement, 
but  which  was  inoperative  because  of  the  failure  of  both 
employers  and  employees  to  accept  the  provisions  of  this 
legislation,  and  then  the  elective  compensation  laws,  which 
contained  provisions  that  made  their  acceptance  more  ad- 
vantageous to  employers  and  employees  as  a  whole  than  the 
continuation  of  the  common  law  system,  and  so  were  effec- 
tive. 

The  methods  of  election  vaiy  in  the  different  states.  The 
election  by  the  employer  may  be  express,  or  it  may  be  by 
implication  in  that  he  is  supposed  to  have  accepted  the  pro- 
visions of  the  law  unless  notice  of  rejection  is  given  in  the 
manner  specified  in  the  law.  When  the  election  is  express 
it  is  usually  sigiiified  by  filing  notice  of  the  election  with 
some  state  authority,  and  by  compliance  with  any  further 
formalities  that  may  be  required,  such  as  the  insurance  of 
the  compensation  obligation,  the  posting  of  notices  of  elec- 
tion in  working  places,  etc.     Even  if  the  election  itself  is 


134  WORKMEN'S  COMPENSATION 

by  implication  in  that  no  formalities  are  required  to  perfect 
it,  notice  of  such  election  must  usually  be  given  to  em- 
ployees so  that  they  may  reject  the  law  if  they  desire  to  do 
so.  The  election  by  the  employee  is  usually  by  implication, 
for  he  is  held  to  have  elected  the  law  after  notice  of  election 
by  the  employer  unless  he  files  notice  of  rejection  in  the 
manner  specified  in  the  law.  In  order  that  the  nominal 
freedom  of  election  and  rejection  may  be  preserved  the 
laws  all  provide  methods  by  which  either  an  employer  or  an 
employee  may  reject  the  law  after  he  has  accepted  it,  or  may 
accept  it  after  rejection. 

According  to  their  application  the  compensation  laws  may 
be  divided  into  two  classes,  those  which  are  limited  to  specific 
occupations  or  classes  of  occupations,  and  those  which  are 
general  in  their  application.  The  principle  on  which  the 
distinction  is  based  in  those  states  which  have  enacted  lim- 
ited compensation  laws  is  that  some  occupations  are  essen- 
tially hazardous  to  life  and  limb,  and  that  the  common  law 
system  of  employers'  liability  is  antiquated  and  inadequate 
when  applied  to  those  occupations,  so  the  substitution  of 
a  compensation  system  is  necessary,  but  as  to  those  occupa- 
tions which  are  non-hazardous,  and  which  do  not  involve  any 
special  dangers  to  employees,  the  common  law  rules  are  still 
sufficient  and  there  is  nothing  inequitable  in  compelling  an 
employee  to  rely  upon  his  common  law  rights  for  any  occu- 
pational injuries  which  he  may  receive.  Taken  as  a  class 
it  may  be  said  that  the  compulsory  laws  are  limited  in  their 
application,  while  the  elective  laws  are  of  general  applica- 
tion. This  statement  is  subject  to  exceptions,  for  some  com- 
pulsory laws  are  general,  while  some  of  the  elective  laws  are 
of  limited  application. 

The  states  which  adopted  the  principle  of  a  limitation 
in  the  application  of  their  compensation  laws  were  only  fol- 


LEGISLATION  m  THE  UNITED  STATES      135 

lowing  a  precedent  which  had  been  set  by  other  countries  in 
the  enactment  of  compensation  legislation.  The  first  law 
passed  in  Germany  was  limited,  and  the  English  act  of  1897 
was  also  limited.  The  German  law  has  been  amended  so  as 
to  make  it  practically  unlimited  in  its  application,  and  the 
English  law  is  now  unlimited.  The  tendency  is  evident, 
therefore,  in  other  countries  to  remove  the  limitations,  and 
there  seems  to  be  no  reason  to  believe  but  what  the  limited 
laws  which  have  been  passed  in  this  country  will  sooner  or 
later  give  way  to  laws  which  are  general  in  their  applica- 
tion. The  limited  laws  usually  provide  that  employers  and 
employees  who  are  not  subject  to  their  operation  may  ac- 
cept the  terms  of  the  law  by  agreement  as  a  substitute  for  the 
common  law  system,  but  no  penalties  are  attached  to  a  re- 
fusal to  accept  their  provisions. 

The  limited  laws  vary  in  detail.  Some  name  a  large  num- 
ber of  specific  occupations  which  they  designate  as  hazardous 
or  extra-hazardous  to  which  the  compensation  principle  shall 
apply;  others  do  not  name  the  specific  occupations  with  as 
much  detail  but  designate  the  occupations  by  classes.  The 
basis  of  the  distinction  between  hazardous  and  non-hazardous 
occupations  which  runs  through  the  laws  is  that  as  to  those 
which  require  work  in  proximity  to  power-driven  machin- 
ery ;  or  in  places  where  explosives  are  used  or  where  chemical 
contact  is  necessary ;  or  in  construction  work  above  the 
ground,  under  the  ground,  or  in  svib-aqueous  operations ;  or  in 
short  in  all  occupations  in  which  there  seems  to  be  any  special 
dangers  involved,  it  seems  that  the  common  law  system  is 
inadequate,  while  there  seems  to  be  no  necessity  for  a  change 
in  the  common  law  rules  as  to  those  occupations  which  do  not 
seem  to  possess  any  special  dangers. 

There  are  certain  limitations  on  the  application  of  prac- 
tically all  of  the  compensation  laws  which  are  general  in 


136  WORKMEN'S  COMPENSATION 

their  application,  but  these  limitations  are  of  a  minor  na- 
ture as  compared  with  the  scope  of  the  operation  of  the  laws. 
Some  of  those  laws  for  the  purpose  of  exempting  small  em- 
ployers provide  that  they  shall  not  apply  to  employers  who 
employ  less  than  a  certain  number  of  employees,  such  as 
five  or  ten.     The  exemption  of  domestic  service  and  farm 
or  agricultural  labour  is  almost  universal.     Domestic  service 
is  exempt  because  it  is  supposedly  non-hazardous  in  its  char- 
acter, but  the  exemption  of  farm  or  agTicultural  labour  can- 
not be  justified  on  that  ground.     Viewing  that  exemption 
from  the  practical  standpoint  the  only  conclusion  which  can 
be  reached  is  that  the  influence  of  the  agricultural  interests 
as  a  class  was  so  strong  with  the  different  legislatures  that 
they  hesitated   to   place   any  such  burdens   on   agricultural 
operations,  and  so  this  exemption  was  inserted  in  practically 
all  of  the  laws.     The  same  practical  considerations  have  also 
secured  specific  exemptions  for  certain  local  interests  in  some 
laws,  which  exemptions  are  peculiar  to  those  laws  and  rest 
upon  no  other  basis  than  that  of  expediency,  for  the  refusal 
to  allow  such  an  exemption  might  have  prevented  the  passage 
of  a  compensation  law.^ 

1  Some  of  these  exemptions  may  ^vell  be  noted  in  order  to  show  the 
influence  of  these  local  considerations  in  the  adoption  of  the  compensa- 
tion principle,  and  it  may  be  noted  that  tliese  considerations  apply 
alike  to  limited  laws  and  to  general  laws.  The  first  Kentucky  act, 
Chapter  73,  Laws  of  1914,  was  a  limited  act,  naming  a  large  number 
of  specific  occupations  to  which  the  law  was  applicable,  but  a  close 
examination  of  the  enumeration  fails  to  disclose  the  fact  that  distilleries 
were  subject  to  its  operation.  The  Texas  act.  Chapter  179,  Laws  of 
1913,  specifically  exempts  cotton  gins  from  its  operation.  Part  I,  Sec- 
tion 2.  The  operation  of  a  cotton  gin  involves  a  number  of  dangers 
to  employees,  so  the  exemption  cannot  be  justified  and  it  can  be  ex- 
plained only  on  grounds  of  expediency.  An  exemption  appears  in  the 
Maine  act.  Chapter  295,  Laws  of  1915,  in  Section  4,  by  virtue  of  which 
"the  work  of  cutting,  hauling,  rafting  or  driving  logs"  is  exempted  from 
the  operation  of  the  act.     It  is  reported  that  the  interests  thus  exempted 


LEGISLATION  IN  THE  UNITED  STATES      13Y 

111  order  that  any  question  of  constitutionality  because  of 
conflict  with  federal  jurisdiction  may  be  avoided  it  is  usually 
provided  in  the  laws  that  they  shall  not  apply  to  any  opera- 
tions directly  involving  interstate  or  foreign  commerce,  for 
this  is  a  matter  over  which  Congress  has  jurisdiction.  These 
operations  are  confined  to  the  transportation  of  persons  or 
thines  from  one  state  to  another  or  to  commerce  between  this 
country  and  foreign  countries,  so  as  to  the  business  of  trans- 
portation the  compensation  laws  apply,  as  a  general  rule, 
only  to  those  operations  which  are  conducted  wholly  in  one 
state,  and  which  are,  therefore,  a  matter  of  state  rather  than 
of  federal  control. 

In  their  operation  the  laws  apply  to  accidental  injuries 
received  by  employees  in  the  course  of  their  employment  and 
arising  out  of  it.  An  exception  appears  in  a  number  of  the 
laws  which  exempts  casual  emplojTnent,  or  employment  not 
in  the  course  of  the  employer's  regular  business.  A  very 
practical  problem  which  has  arisen  in  addition  to  the  in- 
dustrial accident  in  modern  industrial  life  is  that  of  the  occu- 
pational disease.  This  has  not  as  yet  been  generally  recog- 
nised as  covered  for  compensation  under  the  present  com- 
pensation laws,  but  this  is  probably  only  a  temporary  con- 
dition, for  the  tendency  seems  to  be  to  include  coverage  for 
disease  if  such  disease  is  in  any  way  connected  with  acci- 
dental injuries  arising  out  of  employment,  so  the  eventual 
coverage  of  occupational  diseases  for  compensation,  either  by 
express  legislation  or  b_y  construction  of  the  law,  may  be 
regarded  as  only  a  logical  development.  There  is,  in  fact, 
no  logical  reason  why  compensation  should  not  be  paid  for 
disability    arising    from    disease    caused    by    occupational 

were  strong  enough  to  prevent  the  enactment  of  a  compensation  law  in 
1913  when  exemption  was  denied  to  them,  so  this  exemption  was  in- 
serted in  the  law  of  1915  in  order  to  avoid  their  opposition. 


138  WORKME^sT'S  COMPENSATION 

hazards  the  same  as  it  is  paid  for  disability  arising  from 
accidents  sustained  in  the  course  of  employment.^ 

1  The  language  of  the  larger  number  of  the  compensation  laws  in  the 
United  States  limits  their  application  to  "personal  injury  by  accident," 
and  this  language  negatives  the  idea  of  any  intention  on  the  part  of 
the  different  legislatures  to  make  the  laws  apply  to  occupational  dis- 
eases. This  limitation  is  taken  from  the  English  act,  but  that  act 
contains  provisions  which  relate  to  certain  occupational  diseases,  and 
it  also  contains  a  provision  which  authorises  the  Secretary  of  State 
to  extend  the  application  of  the  act  to  other  diseases,  so  that  act  can 
be  made  to  cover  occupational  diseases  by  executive  order.  Such  a  pro- 
vision in  any  of  our  acts  woiild  doubtless  be  unconstitutional,  because 
it  is  essentially  a  delegation  of  legislative  power. 

The  Massachusetts  act  has  been  extended  by  construction  to  cover 
occupational  diseases,  and  that  is  the  only  law,  with  the  exception  of 
the  Federal  law,  which  as  it  was  originally  passed,  has  been  so  inter- 
preted. This  construction  was  given  to  the  law  because  of  the  fact  that 
it  was  made  to  apply  to  "personal  injury"  and  was  not  limited  to  "per- 
sonal injury  by  accident,"  as  was  the  case  with  the  English  law  and 
most  of  the  laws  in  the  United  States.  The  court  held  that  the  dis- 
ability arising  from  an  occupational  disease  was  a  personal  injury  and 
that  as  the  legislature  had  not  limited  the  application  of  the  law  to 
personal  injury  by  accident  there  was  no  question  but  what  it  was  the 
legislative  intention  to  have  the  act  apply  to  occupational  diseases  as 
well  as  to  industrial  accidents.  Hurle's  Case,  217  Mass.  223,  104  North- 
eastern 336;  Johnson's  Case,  217  Mass.  388,  104  Northeastern  259.  The 
Supreme  Court  of  Michigan  reached  a  different  conclusion  in  the  case 
of  Adams  v.  Acme  White  Lead  and  Color  Works,  182  Mich.  157,  148 
Northwestern  485,  and  held  that  occupational  diseases  were  not  covered 
imder  the  ilichigan  act,  for  although  the  language  used  in  the  law  was 
the  same  as  that  used  in  the  ilassachusetts  law,  in  that  the  words 
"personal  injury"  and  not  "personal  injury  by  accident"  were  used,  it 
was  held  that  it  was  the  intention  of  the  legislature  to  limit  the  ap- 
plication of  the  act  to  industrial  accidents  and  that  coverage  of  occu- 
pational diseases  was  not  contemplated. 

It  was  at  first  held  that  occupational  diseases  Avere  not  covered 
imder  the  law  extending  the  compensation  principle  to  Government 
employees,  the  Act  of  May  30,  1908,  35  Statutes  at  Large,  556.  Trie- 
man's  Case,  Opinions  of  the  Solicitor,  Department  of  Labor,  Work- 
men's Compensation  Cases,  page  204.  This  ruling  was  later  overruled 
and  it  was  held  that  occupational  diseases  were  covered.  Jule's  Case, 
ibid.,  page  261.  The  recently  enacted  Federal  compensation  law,  the 
Act  of  September  7,   1916,  Public  No.  267,  64tli  Congress,  applies  to 


LEGISLATION  m  THE  UNITED  STATES      139 

It  is  not  the  intention  of  the  compensation  system  to  put 
a  premium  on  wilful  or  intentional  negligence  on  the  part 
of  an  employee,  so  it  is  usual  to  exempt  injuries  received 
by  reason  of  the  intentional  or  gross  or  wilful  negligence 
of  the  injured  from  the  operation  of  the  law.  If  it  can  be 
shown,  therefore,  that  the  injuries  were  received  because 
of  negligence  of  this  nature  the  injured  would  have  no  re- 
dress, for  the  compensation  law  does  not  provide  indemnity 
and  the  injured  could  not  establish  any  rights  at  common 
law.  Some  of  the  laws  give  additional  rights  to  an  em- 
ployee who  is  injured  by  the  gross,  wilful  or  intentional 
negligence  of  the  employer,  or  because  of  his  violation  of 
statutory  requirements  for  the  safety  of  employees,  but  there 
is  no  general  principle  running  through  our  laws  governing 
such  cases.  The  rights  given  to  the  employee  in  cases  of 
this  nature  may  consist  of  an  additional  percentage  to  the 
compensation  specified  in  the  law,  or  the  option  on  the  part 
of  the  employee  to  waive  the  provisions  of  the  compensation 
law  and  proceed  against  the  employer  at  common  law.  It 
is  considered,  however,  that  the  better  compensation  practice 
in  cases  where  an  injury  is  caused  by  the  wilful  or  inten- 
tional negligence  of  the  employer,  or  by  his  failure  to  pro- 
vide the  safeguards  required  by  statute,  is  not  to  allow  the 

"personal  injury  sustained"  while  in  the  performance  of  duty,  so  under 
the  analogy  of  the  rulings  as  to  tlie  effect  of  the  prior  law  and  of  the 
Massachusetts  cases  there  seems  to  be  no  question  but  wliat  the  lan- 
guage is  broad  enough  to  include  occupational  diseases. 

The  California  Commission  held  in  DeWitt's  Case,  1  California  De- 
cisions, Part  II,  page  170,  that  occupational  diseases  Avere  not  within 
the  scope  of  the  compensation  law,  because  the  legislature  evidently 
did  not  contemplate  such  coverage.  The  law  was  amended  in  1915  by 
substituting  the  word  "injury"  for  the  word  "accident"  wherever  it 
occurred,  and  by  substituting  the  words  "suffering  of  an  injury"  for 
the  "happening  of  an  accident,"  so  the  law  may  now  be  construed  to 
include  occupational  diseases. 


140  WORKMEN'S  COMPENSATION 

employee  any  additional  rights  but  to  provide  a  penalty 
which  shall  be  enforced  by  the  state  when  such  facts  are 
shown. 

There  are  three  underlying  principles  which  must  be  ob- 
served in  order  that  a  compensation  law  may  be  effective. 
The  nature  and  the  amount  of  the  indemnity,  when  the 
right  to  receive  it  has  once  been  established,  must  be  cer- 
tain; the  payment  of  the  indemnity  must  be  secured;  and 
the  law  must  be  administered  so  that  disputes  which  may 
arise  under  it  are  determined  with  as  little  delay  as  possible 
and  its  provisions  carried  into  effect.  The  principles  which 
relate  to  the  security  of  the  payment  of  compensation  and 
to  the  administration  of  the  laws  will  be  discussed  in  subse- 
quent chapters ;  the  balance  of  this  chapter  will  be  devoted 
to  the  principles  relating  to  the  indemnity  provided  in  the 
laws. 

The  first  element  which  must  be  noted  in  discussing  the 
indemnity  provisions  of  the  compensation  laws  is  the  differ- 
ence in  principle  between  the  damages  allowed  by  the  com- 
mon law  system  and  the  indemnity  payments  allowed  by 
the  compensation  system.  It  cannot  be  contended  that  the 
indemnity  provided  by  compensation  is  the  theoretical  equiv- 
alent of  the  damages  which  are  assessed  in  liability  cases 
under  the  common  law,  for  the  indemnity  in  compensation 
is  not  compensatory  in  the  sense  of  common  law  damages, 
because  the  damages  allowed  in  common  law  actions  are  in 
theory  the  monetary  equivalent  of  the  injuries  sustained, 
while  the  theory  of  compensation  is  that  the  indemnity  pro- 
vided is  for  the  purpose  of  keeping  the  injured  and  his  de- 
pendents from  want  and  is  in  no  sense  the  monetary  equiva- 
lent of  the  loss  which  has  been  sustained. 

Under  compensation,  therefore,  the  employee  is  obliged  to 
forego  the  common  law  right  to  recover  compensatory  dam- 


LEGISLATION  IN  THE  UNITED  STATES      141 

ages  iu  cases  of  legal  liability  for  the  right  to  receive  a  defi- 
nite and  certain  indemnity  in  all  cases,  except  those  in  which 
the  injury  and  the  resulting  disability  is  caused  by  his  own 
wilful  misconduct  or  intentional  negligence.  The  employer 
in  return  is  obliged  to  pay  the  indemnity  in  all  cases  to 
which  the  law  applies.  This  situation  involves  concessions 
from  both,  for  the  employee  has  to  make  a  substantial  con- 
cession when  he  is  deprived  of  his  common  law  rights  in 
cases  where  the  employer  is  liable  for  his  injuries,  and  the 
employer  is  obliged  to  assume  substantial  burdens  when  he 
has  to  pay  compensation  for  all  injuries  caused  by  industrial 
accidents.  The  concession  of  the  employee  may  be  regarded 
as  the  consideration  for  the  assumption  of  this  burden  by 
the  employer,  and  on  the  other  hand  the  liability  of  the  em- 
ployer to  pay  compensation  in  all  cases  may  be  regarded  as 
the  consideration  for  this  surrender  of  his  common  law  rights 
by  the  employee. 

A  principle  which  is  found  in  practically  all  of  the  com- 
pensation laws  in  force  in  the  United  States  is  that  no  com- 
pensation shall  be  paid  for  a  certain  definite  time  after  the 
beginning  of  the  disability.  This  space,  which  is  known  as 
the  "waiting  period,"  is  not  over  two  weeks  in  any  of  the 
laws,  and  the  tendency  is  to  reduce  it  to  one  week,  or  even 
less,  but  not  to  eliminate  it  altogether.  This  principle  is 
taken  from  the  English  law,  but  its  application  in  the  greater 
number  of  our  laws  is  a  little  different  from  its  application 
in  England,  for  the  English  law  provides  that  the  employer 
shall  not  be  liable  for  any  injury  which  does  not  disable 
the  workmen  for  at  least  one  week,  and  that  if  the  incapacity 
lasts  less  than  two  weeks  no  payment  shall  be  made  for  the 
first  week  of  incapacity,  so  if  the  incapacity  lasts  longer 
than  two  weeks  the  disability  pa^mients  are  from  the  date 
pf  the  injury.     The  waiting  period  in  the  majority  of  the 


142  WORKMEN'S  COMPENSATION 

laws  in  the  United  States  is  a  period  during  which  no  com- 
pensation is  paid.  The  indemnity  provisions  of  the  laws 
are  not  effective  unless  the  disabilitv  lasts  beyond  the  wait- 
ing period,  and  the  payments  are  for  the  disability  after  the 
expiration  of  the  waiting  period.^ 

The  purpose  of  this  provision  establishing  a  waiting  pe- 
riod is  to  prevent  an  accumulation  of  small  claims  for  minor 
injuries,  and  to  prevent  the  malingering  which  might  be  an 
incident  of  such  small  claims,  for  it  is  assumed  that  many 
claims  of  that  nature  would  be  made  if  the  compensation 
laws  paid  indemnity  for  short  periods  of  disability,  and  that 
there  would  be  a  tendency  on  the  part  of  injured  workmen 
to  prolong  the  disability  as  much  as  possible  in  such  cases. 
The  German  system  has  met  this  situation  by  providing  that 
the  payments  for  the  first  thirteen  weeks  of  disability  shall 
be  made  from  the  sick  funds,  to  which  the  greater  part  of 
the  contributions  are  made  by  the  employees,  so  that  they 
themselves  bear  the  larger  part  of  the  burden  of  the  pay- 
ments which  are  made  in  cases  where  the  disability  is  short 
and   temporary.     The   English    and   the   American    systems 

1  In  some  states  the  waiting  period  is  eliminated  if  the  disability 
lasts  for  a  specified  time,  but  is  effective  if  the  disability  does  not  last 
beyond  the  period  specified.  In  some  other  states  there  is  no  waiting 
period  as  such  but  no  indemnity  is  paid  unless  the  disability  lasts  be- 
yond a  specified  time,  in  which  case  indemnity  is  payable  from  the  be- 
ginning of  the  disability.  Michigan,  Nebraska,  and  Wisconsin  may  be 
cited  as  examples  of  the  former  class.  The  waiting  period  in  Michigan 
is  two  weeks,  but  if  the  disability  continues  beyond  eight  weeks  com- 
pensation is  payable  from  the  date  of  the  injury.  The  provision  is  the 
same  in  Nebraska  as  it  is  in  Michigan.  In  Wisconsin  the  waiting 
period  is  one  week,  but  if  the  disability  lasts  more  than  four  weeks  the 
indemnity  is  payable  from  the  date  of  the  injury.  Arizona  and  Kansas 
are  examples  of  the  latter  class.  In  Arizona  no  payment  is  made  for 
disability  which  lasts  less  than  two  weeks;  if  the  disability  lasts  more 
than  two  weeks  compensation  is  payable  from  the  date  of  the  injury. 
In  Kansas  the  provision  is  substantially  the  same  as  in  Arizona.  In 
Oregon  and  Washington  there  is  no  waiting  period. 


LEGISLATION  IN  THE  UNITED  STATES      143 

could  not  meet  the  situation  in  tliat  way,  so  the  principle  of 
the  waiting  period  was  adopted. 

A  provision  which  is  practically  universal  in  the  com- 
pensation laws  which  have  been  passed  in  the  United  States 
is  that  the  employer  shall  provide  medical  and  surgical  aid 
for  an  injured  employee.  This  obligation  may  be  unlimited, 
in  that  the  employer  is  required  to  furnish  all  such  aid  as  is 
necessary  during  the  entire  period  of  disability,  or  it  may 
be  subject  to  some  limitations.  These  limitations  may  be 
as  to  the  time  during  which  such  aid  shall  be  furnished, 
the  amount  of  the  expense  for  which  the  employer  shall  be 
liable,  or  there  may  be  limitations  as  to  both  time  and  ex- 
pense. Certain  limitations  are  found  in  most  of  the  laws, 
but  the  tendency  to  increase  the  obligation,  as  the  effects  of 
the  limitations  are  called  to  the  attention  of  the  legislatures, 
is  noticeable.  In  some  states  where  the  obligation  was  at 
first  limited  the  limitations  have  been  removed,  and  it  is 
safe  to  predict  that  many  of  the  other  states  will  follow  this 
precedent.^ 

1  The  amendments  removing  the  limitations  on  "statutory  medical 
aid,"  as  this  obligation  is  called,  have  taken  two  forms.  One  form  re- 
moves the  limitation  in  all  cases,  while  the  other  gives  the  administra- 
tive authorities  discretion  to  order  such  services  beyond  a  specified 
period  in  cases  where  it  is  deemed  necessary.  Connecticut  is  an  ex- 
ample of  the  former  procedure,  Massachusetts  of  the  latter.  The  Con- 
necticut law  as  passed  in  1913  provided  for  statutory  medical  aid  for 
thirty  days  following  the  injury,  without  any  limitation  as  to  the 
amoimt  of  the  expense  for  it;  the  law  was  amended  in  1915  so  that  the 
employer  is  now  required  to  provide  all  such  services  as  may  be  deemed 
reasonable  and  necessary.  In  Massachusetts  the  law  as  passed  in  1911 
provided  for  statutory  medical  aid  for  two  weeks,  without  any  limita- 
tion as  to  the  amount;  in  1914  the  law  was  amended  so  as  to  permit 
the  Industrial  Accident  Board  to  order  treatment  for  a  longer  period 
in  vmusual  cases.  Tlie  method  adopted  in  Massachusetts  may  be  re- 
garded as  preferable  to  that  in  Connecticut,  for  this  is  a  provision  of 
the  law  which  must  be  carefully  administered  in  order  to  prevent  its 
cost  from  becoming  excessive,  so  it  is  advisable  to  require  the  admin- 


144  WORKMEN'S  COMPENSATION 

This  principle,  as  far  as  its  origin  can  be  ascribed  to  any 
foreign  precedent,  may  be  considered  to  be  an  adaptation 
of  the  provision  in  the  German  system  which  requires  that 
such  aid  shall  be  furnished  to  an  injured  employee.  Under 
that  system  the  obligation  is  unlimited,  but  the  expenses  for 
the  first  thirteen  weeks  come  from  the  sick  funds,  to  which 
the  employees  themselves  contribute  the  larger  part,  and  then 
from  the  accident  funds,  which  are  supported  wholly  by 
the  employers.  The  English  law  makes  no  provisions  for 
any  such  expenses  except  in  fatal  cases  where  no  dependents 
survive.  The  common  law  recognised  no  such  obligation, 
but  the  expenses  of  medical  and  surgical  attendance,  etc., 
which  an  injured  workman  had  to  incur  on  account  of  his 
injury  were  elements  to  be  considered  in  the  assessment  of 
damages  if  any  recovery  could  be  enforced  against  the  em- 
ployer. The  reason  for  this  provision  is  apparent.  One 
of  the  objects  of  compensation  is  the  conservation  of  human 
resources,  and  it  is  an  important  element  in  the  accomplish- 
ment of  this  object  that  proper  medical  and  surgical  atten- 
tion be  given  to  injured  employees.  Any  compensation  law, 
therefore,  which  does  not  provide  for  adequate  statutory 
medical  aid  is  defective  in  one  of  the  essential  particulars  of 
the  system. 

The  disability  recognised  by  the  compensation  laws  in  non- 
fatal cases  is  of  two  kinds,  total  and  partial,  each  of  which 
is  divided  into  two  classes,  permanent  total  disability  and 
temporary  total  disability,  and  peraianent  partial  disability 
and  temporary  partial  disability.  In  fatal  cases  the  com- 
pensation payments  are  for  the  benefit  of  the  dependents, 
and  two  kinds  of  dependency  are  recognised,  total  and  par- 
tial.    The  difference  in  the  method  of  indemnity  payments 

istrative  authorities  to  pass  on  cases  which  may  seem  to  need  treatment 
for  a  longer  period  than  is  specified  in  the  law. 


LEGISLATIO:Nr  IN"  THE  UNITED  STATES      145 

under  the  compensation  system  and  the  payment  of  dam- 
ages under  the  common  law  system  is  one  of  the  distinguish- 
ing elements  of  the  compensation  system,  and  attention 
should  be  called  to  this  principle  of  the  system  before  con- 
sideration is  given  to  the  matter  of  the  amount  of  indemnity 
allowed  by  the  compensation  laws.  When  damages  are  as- 
sessed in  a  common  law  action  the  amount  is  determined  and 
then  if  pajaucnt  is  made  it  is  usually  in  one  sum.  This  is 
also  the  usual  procedure  in  cases  where  settlements  are  made 
without  suit.  There  is  nothing  in  the  common  law  which 
prevents  an  agreement  between  the  parties  that  the  damages 
shall  be  paid  by  periodical  payments,  but  the  common  law 
system  provides  no  machinery  for  the  administration  of  such 
agreements,  and  so  they  are  rare.  The  practical  effect  of 
the  common  law  procedure  was  that  after  the  damages  were 
paid  in  a  single  amount  the  money  was  soon  spent  in  one 
way  or  another  in  the  greater  number  of  cases,  and  the  pur- 
pose of  the  payment  as  to  the  care  of  the  injured  in  cases  of 
serious  or  permanent  injuries,  or  of  the  dependents  in  fatal 
cases,  was  lost. 

The  way  in  which  the  compensation  system  obviates  this 
defect  in  the  common  law  system  is  by  providing  that  the 
indemnity  which  is  paid  to  the  injured  or  to  the  dependents 
in  compensation  cases  shall  be  paid  in  small  amounts  by 
periodical  payments,  so  that  the  money  shall  be  used  for 
living  expenses,  and  not  for  any  purposes  which  are  merely 
temporary,  or  for  purposes  of  investment  or  speculation. 
It  has  already  been  noted  that  conservation  is  one  of  the 
essential  elements  of  compensation.  Primarily  this  element 
of  conservation  takes  the  form  of  protection  for  the  health, 
lives  and  limbs  of  employees  by  attempting  to  prevent  all 
accidents  which  are  avoidable,  and  by  attempting  to  mitigate 
the  physical  consequences  of  those  which  do  occur,  but  when 


146  WOKKMEN'S  COMPENSATIOISr 

indemnity  is  once  payable  on  account  of  the  disability  wbich 
has  resulted  from  an  accident  it  is  the  object  of  the  system 
to  see  that  the  injured  or  his  dependents  receive  the  in- 
demnity for  the  purpose  of  mitigating  the  financial  loss  re- 
sulting from  the  injury.  Experience  has  shown  that  this 
end  can  best  be  accomplished  by  the  payment  of  certain 
amounts  at  regular  intervals,  and  so  the  compensation  sys- 
tem has  adopted  this  method  of  indemnity  payments. 

The  payments  made  to  an  injured  employee  under  this 
system  are  based  upon  his  average  weekly  wages,  and  con- 
sist of  a  certain  percentage  of  the  average  weekly  wages. 
This  percentage  varies  in  the  different  states,  the  variation 
being  from  fifty  to  sixty-six  and  two-thirds  per  cent.  For 
illustrative  purposes  the  indemnity  payments  at  present  al- 
lowed by  the  Massachusetts  compensation  act  will  be  used 
in  this  survey  of  the  benefits  provided  by  the  compensation 
system,  for  although  the  different  acts  vary  in  detail  as  to 
the  payments  there  is  a  substantial  uniformity  in  principle 
running  through  them  all,  and  the  payments  specified  in  any 
one  of  the  laws  may  well  be  used  as  illustrative  of  the  prin- 
ciple. 

For  total  disability,  either  permanent  or  temporary,  the 
Massachusetts  act  provides  for  a  payment  of  sixty-six  and 
two-thirds  per  cent,  of  the  average  weekly  wages,  but  not 
more  than  ten  dollars  nor  less  than  four  dollars  a  week, 
during  the  continuance  of  the  disability,  but  this  provision 
is  subject  to  the  limitation  that  the  payments  shall  not  ex- 
tend beyond  a  period  of  five  hundred  weeks  and  that  the 
amount  paid  shall  not  exceed  four  thousand  dollars.  Most 
of  the  laws  contain  this  principle  of  a  limitation  as  to  the 
compensation  which  shall  be  paid,  the  limitation  consisting 
either  of  a  time  limit  or  a  limit  as  to  the  total  amount,  or 
a  limitation  as  to  both  time  and  amount  as  in  the  Massachu- 


LEGISLATION  IN  THE  UNITED  STATES      147 

setts  law.  Such  a  limitation  cannot  be  defended  except  on 
grounds  of  expediency.  The  only  rational  theory  on  which 
the  compensation  system  can  rest  is  that  if  the  principle  is 
sound  compensation  should  be  paid  during  the  continuance 
of  the  disability,  or  during  the  dependency  in  fatal  cases, 
hence  any  limitation  which  deprives  the  beneficiary  of  com- 
pensation after  a  stated  period  or  after  a  certain  amount 
has  been  paid  is  fundamentally  unsound  if  the  principle  in 
itself  is  sound.  The  compensation  system,  however,  is  such 
a  radical  departure  from  the  common  law  system  that  in 
its  inception  in  this  country  this  principle  of  limitation  was 
adopted  in  order  that  the  change  might  not  be  too  drastic. 
The  tendency  is  as  the  laws  are  amended  and  as  new  laws 
are  passed  both  to  increase  the  limits  and  to  remove  the 
limitations  altogether,  so  as  time  passes  this  element  of  un- 
soundness in  our  compensation  legislation  will  doubtless  be 
eliminated. 

Partial  disability  may  follow  a  period  of  total  disability 
or  it  may  be  independent  of  total  disability,  and  it  may  be 
either  permanent  or  temporary.  The  effect  of  partial  dis- 
ability is  to  occasion  a  diminution  in  the  earning  power  of 
the  injured  rather  than  to  stop  it  altogether,  so  the  compen- 
sation which  is  paid  for  partial  disability  is  a  percentage 
of  the  loss  in  earning  power  occasioned  by  the  accident  and 
its  resulting  injury.  In  Massachusetts  the  payment  is 
sixty-six  and  two-thirds  per  cent,  of  the  difference  between 
the  average  weekly  wages  before  the  injury  and  the  average 
weekly  wages  which  the  injured  is  able  to  earn  thereafter, 
subject  to  a  maximum  of  ten  dollars  a  week  and  to  a  limita- 
tion of  five  hundred  weeks  as  to  time  and  four  thousand  dol- 
lars as  to  amount,  the  same  as  in  cases  of  pennanent  disa- 
bility. 

Permanent  partial  disability  is  frequently  caused  by  some 


148  WORKMEN'S  COMPENSATION 

dismemberment  which  of  itself  is  not  sufficient  to  cause 
total  disability.  Two  methods  of  dealing  with  this  situa- 
tion have  been  adopted  in  the  compensation  legislation  in 
the  United  States.  One  is  to  allow  total  disability  for  a 
certain  period  for  specific  dismemberments  in  lieu  of  all 
other  compensation ;  the  other  is  to  allow  total  disability 
payments  for  a  certain  period  for  such  dismemberments  in 
addition  to  all  other  compensation,  so  that  in  the  states  in 
which  this  procedure  has  been  adopted  the  injured  receives 
the  compensation  for  specific  dismemberments  and  in  addi- 
tion his  compensation  for  total  or  partial  disability,  as  the 
case  may  be,  as  long  as  the  disability  lasts,  subject  to  any 
limits  as  to  the  time  or  amount  of  compensation.  This 
latter  procedure  is  provided  in  the  Massachusetts  law.  As 
an  illustration  of  this  provision  it  may  be  said  that  in  Massa- 
chusetts at  the  present  time  a  total  disability  pajTiient  of 
compensation  for  fifty  weeks  is  made  for  the  loss  of  either 
hand  at  or  above  the  wrist  or  either  foot  at  or  above  the 
ankle  in  addition  to  the  other  pajTiients  made  on  account  of 
this  injury.  In  Pennsylvania,  for  example,  a  state  which 
has  adopted  the  principle  of  specific  payments  exclusively 
for  specific  dismemberments,  the  corresponding  payments 
would  be  fifty  per  cent,  of  wages,  subject  to  a  minimum 
of  five  dollars  and  a  maximum  of  ten  dollars  a  week,  for 
one  hundred  and  seventy-five  weeks  for  the  loss  of  a  hand 
and  one  hundred  and  fifty  weeks  for  the  loss  of  a  foot. 

The  payment  in  Massachusetts  in  fatal  cases  to  those 
"wholly  dependent"  on  the  deceased  is  sixty-six  and  two- 
thirds  per  cent,  of  the  average  weekly  wages,  subject  to  the 
same  maximum  and  minimum  and  the  same  limits  as  to  time 
and  amount  as  in  non-fatal  cases  of  total  disability.  If  the 
dependents  are  "only  partially  dependent"  the  payment  con- 
sists  of  the  same  proportion   of  the  weekly  payments  for 


LEGISLATION  IN  THE  UNITED  STATES      149 

those  wholly  dependent  "as  the  amount  contributed  by  the 
employee  to  such  partial  dependents  bears  to  the  annual 
earnings  of  the  deceased  at  the  time  of  his  injury."  The  pro- 
visions for  partial  dependents  cannot  be  made  very  definite, 
so  they  are  necessarily  somewhat  obscure  and  considerable 
discretion  must  be  allowed  in  the  administration  of  this  part 
of  the  law.  Certain  domestic  relations  are  usually  specified 
in  the  laws  which  when  shown  constitute  total  dependency 
without  any  further  proof;  the  matter  of  dependency,  either 
total  or  partial,  outside  of  these  relations  is  a  question  of  fact 
which  must  be  established  by  sufficient  evidence.  In  cases 
where  no  dependents  survive  the  payment  is  limited  in  Massa- 
chusetts to  the  reasonable  expenses  of  the  last  sickness  and 
burial,  not  to  exceed  two  hundred  dollars.  It  is  a  general 
principle  in  our  compensation  legislation  that  when  there 
are  no  dependents  the  payments  in  fatal  cases  are  subject  to 
some  such  limitations,  for  in  such  cases  there  is  no  reason 
why  any  payments  on  a  compensation  basis  should  be  made 
to  persons  who  were  not  dependent  on  the  deceased. 

The  treatment  by  the  compensation  system  of  the  cases 
in  which  no  dependents  survive  shows  the  distinction  be- 
tween the  method  adopted  by  the  common  law  system  of 
dealing  with  such  cases  and  that  adopted  by  the  compensa- 
tion system.  The  common  law  system  originally  allowed 
no  recovery  in  fatal  cases,  but  statutes  were  passed  from  time 
to  time  which  allowed  a  recovery  in  these  cases  and  this 
principle  became  a  part  of  the  system  in  all  common  law 
jurisdictions.  While  the  recovery  permitted  by  these  stat- 
utes might  be  primarily  for  the  benefit  of  the  dependents 
of  the  deceased,  the  personal  representatives  were  usually 
allowed  to  recover  damages  on  behalf  of  the  estate  of  the 
decedent  in  cases  where  there  were  no  dependents,  this  re- 
covery to  be  distributed  according  to  the  statutes  regulating 


150  WOKKMEN'S  COMPENSATION 

the  distribution  of  estates.  Under  the  compensation  system, 
however,  the  indemnity  payments  are  for  the  purpose  of 
avoiding  want  on  the  part  of  those  who  may  be  dependent 
on  the  deceased,  so  if  there  are  no  dependents  there  is  no 
reason  why  any  indemnity  payment  should  be  made. 

While  it  is  one  of  the  fundamental  principles  of  the  com- 
pensation system  that  the  payments  shall  be  made  in  small 
amounts  at  frequent  and  regular  intervals,  in  order  that  the 
payments  may  be  conserved  and  the  money  applied  for  the 
pui'pose  for  which  it  was  intended,  this  is  not  a  firm,  unyield- 
ing, and  inelastic  rule.  This  should  be  the  procedure  in 
the  vast  majority  of  compensation  cases,  but  it  is  recognised 
that  there  are  some  cases  in  which  for  various  reasons  it 
may  be  advisable  that  the  small  payments  be  commuted  into 
a  single  payment  or  several  larger  payments,  so  the  com- 
pensation laws  generally  have  provided  for  lump  sum  pay- 
ments. This  provision  of  the  law,  however,  is  not  left  wholly 
subject  to  the  agreement  of  the  parties.  It  is  a  principle  of 
the  administration  of  the  compensation  laws  that  such  agree- 
ments must  be  approved  by  the  tribunal  charged  with  the 
administration  of  the  law  before  they  can  be  carried  into  ex- 
ecution, and  as  it  is  one  of  the  fundamentals  of  compensation 
administration  that  agreements  of  this  nature  shall  not  be 
approved  unless  good  and  sufficient  reasons  are  shown  they 
are  comparatively  rare.  It  is  not  usual  to  specify  the  cir- 
cumstances under  which  these  agreements  shall  be  made  and 
approved,  but  to  leave  those  matters  to  the  sound  discretion 
of  the  administrative  authorities. 

Some  of  the  injuries  on  account  of  which  an  employee  has 
the  right  to  receive  compensation  from  his  employer  may 
arise  under  such  circumstances  that  the  injured  has  the  right 
to  proceed  against  a  third  party  for  the  recovery  of  damages 
at  common  law.     The  compensation  system  recognises  this 


LEGISLATION  IN  THE  UNITED  STATES      151 

situation,  and  it  is  usual  to  insert  a  provision  in  the  laws 
which  allows  the  employee  who  is  injured  under  circum- 
stances which  may  entitle  him  to  compensation  or  to  damages 
from  a  third  party  to  elect  whether  to  accept  compensation  or 
to  proceed  against  the  party  responsible  for  the  injury,  but 
the  election  when  once  made  is  final.  If  the  employee  elects 
compensation  the  employer  is  usually  given  the  right  to  pro- 
ceed against  the  party  responsible  for  the  injury  to  recover 
damages,  and  if  the  recovery  is  in  excess  of  the  compensation 
paid  the  excess  is  for  the  benefit  of  the  injured  employee. 

It  is  inconsistent  with  the  compensation  principle  that  the 
employer  should  be  allowed  to  relieve  himself  of  the  obliga- 
tions which  the  system  imposes  by  any  agreement  on  the  part 
of  the  employee  to  waive  his  rights  under  the  compensation 
law,  so  the  laws  usually  specify  that  any  such  waiver  is  void. 
It  is  also  usual  to  provide,  in  order  that  the  employee  may 
have  the  full  benefit  of  the  compensation  pa^Tiients,  that  any 
assignment  or  release  of  claims  for  compensation  shall  be 
invalid,  and  that  such  claims  shall  be  exempt  from  levy  of 
execution  and  attachment,  or  other  remedy  for  the  recovery 
or  collection  of  a  debt.  The  compensation  is  for  the  benefit 
of  the  injured  or  his  dependents,  so  the  laws  usually  specify 
that  the  pajTnents  shall  be  made  only  to  the  injured  or  the 
dependents. 

The  question  as  to  the  extra-territorial  application  of  the 
compensation  laws  is  one  of  the  practical  questions  which 
has  arisen  in  connection  with  the  administration  of  the  laws 
in  the  United  States,  for  many  of  the  laws  have  no  pro- 
visions which  relate  specifically  to  this  issue  and  so  it  is 
necessarv  to  determine  when  the  issue  arises  in  those  states 
in  which  there  is  no  such  provision  in  the  law  as  to  whether 
or  not  the  law  shall  have  any  extra-territorial  eifect.  With 
the  state  boundary  lines  virtually  effaced  and  employees  hired 


152  WOKKMEN'S  COMPENSATION 

in  one  state  sent  into  other  states  to  work  the  question  is  as 
to  whether  accidental  injuries  which  may  occur  in  states 
other  than  the  state  where  they  were  employed  are  covered 
under  the  law  of  the  state  w^here  the  accident  happened  or 
the  law  of  the  state  where  the  contract  of  employment  was 
made.  Some  of  the  laws  specifically  provide  that  they  shall 
apply  only  to  accidental  injuries  which  may  be  sustained 
in  the  state  in  which  the  law  was  enacted,  but  most  of  the 
laws  are  silent  on  this  subject. 

This  situation  arises  frequently  in  cases  where  the  employ- 
ment in  the  foreign  state  is  of  a  temporary  nature,  for  in 
cases  wdiere  a  foreign  employer  is  doing  permanent  work  in 
a  state  he  usually  complies  with  the  compensation  law  of  that 
state,  but  in  the  case  of  salesmen  or  any  other  employees  go- 
ing from  state  to  state  it  is  often  impractical,  if  not  impossi- 
ble, to  comply  with  the  compensation  law  of  each  state  in 
which  the  employer  may  operate.  The  law  cannot  at  present 
be  regarded  as  settled  on  this  question  of  the  extra-territorial 
effect  of  the  compensation  acts,  but  two  factors  have  co- 
operated to  accomplish  a  practical  solution  of  the  issue  and 
obviate  the  necessity  for  judicial  decision  in  many  cases. 
In  the  first  place,  the  tendency  is,  as  between  employer  and 
employee,  to  regard  the  contract  of  emplo>Tnent  as  subject 
to  the  compensation  law  of  the  state  in  which  the  contract 
was  made,  regardless  of  the  place  where  an  accident  may 
occur,  and  if  an  injured  employee  accepts  compensation  under 
the  law  of  the  state  where  his  contract  of  employment  was 
made  he  automatically  waives  any  other  rights  against  his 
employer.  The  second  factor  is  the  attitude  of  the  insurance 
company  which  assumes  the  compensation  obligation  of  the 
employer,  for  if  the  insurer  receives  the  proper  premium  on 
the  pay  of  the  injured  it  is  immaterial  as  an  insurance  propo- 
sition where  the  accident  may  happen,  so  it  would  pay  com- 


LEGISLATION  IN^  THE  UNITED  STATES      153 

pensation  under  the  law  of  the  state  where  the  contract  of 
employment  was  made  for  accidents  which  occur  in  the  course 
of  employment  regardless  of  the  fact  that  the  accidents  hap- 
pened in  another  jurisdiction. 

EEFEEENCES 

Compensation  Laws  of  the  United  States  and  Foreign  Countries, 
Bulletin  No.  203,  Bureau  of  Labor  Statistics.  (Washing- 
ton.) 

Digest  of  Workmen's  Compensation  Laws,  F.  K.  Jones,  New 
York,  1915,  Supplement,  1916. 

Uniform  Workmen's  Compensation  Act,  The  iVraerican  Bar 
Association  Journal,  Vol.  I,  pages  416-449. 

The  Field  of  Workmen's  Compensation  in  the  United  States,  W. 
C.  Fisher,  The  American  Economic  Review,  Vol.  V,  page 
221. 

A  Survey  of  Workmen's  Compensation  Legislation,  2d  Annual 
Report,  Massachusetts  Industrial  Accident  Board,  page  129. 

Workmen's  Compensation  in  the  United  States,  W.  G.  Cowles, 
Liability  and  Compensation  Lectures,  page  90. 

American  Compensation  Legislation,  I.  M.  Rubinow,  Social  In- 
surance, Chapter  XL 

A  Criticism  of  American  Compensation  Legislation,  I.  M.  Rubi- 
now, Social  Insurance,  Chapter  XII. 

Standards  for  Workmen's  Compensation  Laws,  xA.merican  Asso- 
ciation for  Labor  Legislation,  New  York,  1916. 

The  compensation  movement  in  several  of  the  States  has  had 
a  distinctive  history,  which  appears  in  the  different  reports  that 
have  been  made,  the  laws  that  have  been  passed,  the  decisions 
that  have  been  rendered  both  regarding  the  constitutionality  and 
the  operation  of  the  laws,  and  the  official  and  the  unofficial  com- 
ments that  have  been  made  concerning  the  laws.  A  number  of 
these  references  have  been  cited  in  this  and  the  two  preceding 
chapters,  but  in  order  that  some  of  the  most  significant  of  them 
may  be  arranged  under  the  heading  of  the  different  States  a  few 


154  WORKMEN'S  COMPENSATION 

of  the  documentary  landmarks  are  grouped  herewith  under  the 
States  to  which  they  refer : 

MASSACHUSETTS 

The  Insurance  of  Workingmen,  Part  II,  Eeport  for  1900,  Bureau 
of  Statistics  of  Labor. 

Eeport  of  Committee  on  Eelations  Between  Employer  and  Em- 
ployee, January,  1904. 

The  Law  Authorizing  Voluntary  Compensation,  Chapter  489, 
Laws  of  1908. 

The  Compensation  Law,  Chapter  751,  Laws  of  1911.  (Note  the 
amendments,  1912-1916.) 

The  Law  Held  Constitutional,  Opinion  of  the  Justices,  209  Mass. 
607,  96  N.  E.  398. 

Eeport  of  Commission  on  Compensation  for  Industrial  Accidents, 
1912. 

Eeports  of  Cases  Under  the  Workmen's  Compensation  Act,  The 
Industrial  Accident  Board.  (Three  volumes  have  already 
been  published,  1916.) 

Annual  Eeports  of  the  Industrial  Accident  Board.  (Three  vol- 
umes have  already  been  published,  1916.) 

Fifty-ninth  Insurance  Eeport,  Life  and  Miscellaneous,  1914, 
pages  5-28. 

Eeport  on  Workmen's  Compensation  Insurance,  Commission  to 
Investigate  Practices  and  Eates,  1915. 

MAEYLAND 

The  Co-operative  Insurance  Fund,  Chapter  139,  Laws  of  1902. 
The  Law  Held  Unconstitutional,  Franklin  v.  The  United  Eail- 

ways  and  Electric  Co.,  opinion  printed  in  the  Bulletin  of 

the   Bureau   of  Labor    (Washington),   No.    57,   page   689. 

(March,  1905.) 
Operation  of  the  Law,  see  same  Bulletin,  page  645. 
Miners'    Co-operative    Insurance   Fund,    Allegany    and    Garrett 

Counties,  Chapter  153,  Laws  of  1910. 


LEGISLATION  IN  THE  UNITED  STATES     155 

The  Vohmtary  Insurance  Law,  Chapter  837,  Laws  of  1912. 
The  Compulsory  Compensation  Law,  Chapter  800,  Laws  of  1914. 

NEW  YOEK 

Senate  Journal,  1898,  pages  400-401. 

Report  of  the  Employers'  Liability  Commission,  1910. 

The  Compulsory  Compensation  Law  in  Dangerous  Employments, 

Chapter  674,  Laws  of  1910. 
The  Laws  Held  Unconstitutional,  Ives  v.  South  Buffalo  Railway 

Co.,  201  N.  Y.  271,  94  N.  E.  431. 
The  Voluntary  Compensation  Law,  Chapter  352,  LaAvs  of  1910. 
The  Constitutional  Amendment,  Laws  of  1912,  Vol.  II,  page 

1382. 
The  Compulsory  Compensation  Law,  Chapter  816,  Laws  of  1913, 

re-enacted  "by  Chapter  41,  Laws  of  1914.     Amended  in  1915 

and  1916,  and  now  Chapter  67  of  the  Consolidated  Laws. 

OHIO 

The  Workmen's  Compensation  and  State  Insurance  Act,  Senate 
Bill  No.  127,  Laws  of  1911. 

Ohio  State  Insurance  Law,  with  Comments  Thereon,  a  pamphlet 
published  by  The  Travelers  Insurance  Co.,  Hartford,  Conn., 
1911. 

Workmen's  Compensation  Act,  with  Notes,  etc.,  a  pamphlet 
published  by  the  State  Liability  Board  of  Awards,  Colum- 
bus, 1912. 

The  Constitutional  Amendment  Authorizing  a  State  Insurance 
Fund,  Section  35,  Article  II,  adopted  September  3,  1912. 

Report  of  the  State  Liability  Board  of  Awards,  for  the  year  end- 
ing November  15,  1912.     (Columbus,  1913.) 

The  Compulsory  State  Insurance  Act,  Senate  Bill  No.  48,  Laws 
of  1913,  Chapter  28b,  General  Code  of  Ohio. 

WASHINGTON 

The  Workmen's  Compensation  and  State  Insurance  Act,  Chapter 
74,  Laws  of  1911. 


156  WOEKMEN'S  COMPElSrSATIO:^' 

The  Laws  Held  Constitutional,  State  v.  Clausen,  65  Wash.  156, 
117  Pac.  1101. 

Insurance  for  Workingmen  (State  of  Washington),  B.  J.  Hen- 
drick,  McClure's  Magazine,  Volume  XL,  page  169.  (De- 
cember, 1913.) 

Compulsory  State  Insurance  from  the  Workman's  Viewpoint,  II 
American  Labor  Legislation  Eeview,  page  15. 

Annual  Eeports,  Industrial  Insurance  Department,  State  of 
Washington,  Olympia. 

Workmen's  Compulsory  Insurance  System,  State  of  Washington, 
a  criticism  by  J.  Y.  Patterson,  Seattle,  Washington,  pub- 
lished in  pamphlet  form  by  Mr.  Patterson. 

The  True  Situation  in  Washington,  G.  H.  Driggers,  published  in 
pampldet  form  by  The  Market  World  and  Chronicle  Print, 
New  York. 


CHAPTER  VIII 

THE    INSURANCE    OF    THE    COMPENSATION    OBLIGATION 

One  of  the  serious  defects  of  the  common  law  system  of 
employers'  liability  was  the  fact  that  there  was  no  security 
provided  by  the  system  for  the  pajanent  of  any  damages 
which  an  injured  employee  might  be  entitled  to  recover.  A 
plaintiff  might  recover  a  judginent  at  the  end  of  a  long  period 
of  litigation  only  to  find  the  defendant  without  any  property 
with  which  to  satisfy  the  judgment,  and  so  his  efforts  were 
wasted.  If  an  attachment  of  property  sufficient  to  protect 
the  judgTnent  had  been  made  at  any  stage  of  the  proceedings 
the  plaintiff  was  safe,  or  if  in  the  absence  of  any  such  attach- 
ment the  defendant  had  property  of  sufficient  value  which 
could  be  reached  by  an  attachment  at  the  termination  of  the 
proceedings  the  plaintiff  was  also  safe,  but  if  no  attachment 
had  been  made  and  the  defendant  was  unable  to  satisfy  the 
judgment  the  plaintiff  lost  the  benefit  of  his  recovery. 

It  is,  therefore,  an  essential  element  of  a  system  which 
recognises  the  right  of  an  injured  to  recover  indemnity  for 
all  industrial  accidents,  if  that  system  is  to  accomplish  its 
purpose,  that  the  payment  of  the  required  indemnity  shall 
be  secured  so  that  the  element  of  uncertainty  as  to  the  re- 
covery of  indemnity  shall  be  reduced  to  a  minimum.  This 
security  of  pajTuent  is  best  effected  by  insurance  of  some  sort, 
so  in  order  to  be  complete  the  compensation  system  must 
in  the  first  place  provide  for  the  insurance  of  the  obligations 

imposed  by  the  compensation  law  and  then  see  that  the  in- 

157 


158  WOKKMEN'S  COMPENSATION 

surance  requirements  are  observed.  Any  compensation  law 
which  does  not  require  insurance  and  then  see  that  its  in- 
surance provisions  are  carried  into  effect  is  to  that  extent 
defective. 

As  to  their  insurance  provisions  the  compensation  laws 
which  have  been  passed  in  the  United  States  may  be  divided 
into  three  general  classes :  First ;  those  which  establish  a 
state-administered  system  of  mutual  insurance  to  the  exclu- 
sion, or  virtual  exclusion,  of  all  other  forms  of  insurance, 
and  require  all  employers  subject  to  the  law  to  insure  in  the 
state  fund.  This  is  the  form  of  security  which  is  designated 
in  our  compensation  system  as  "state  insurance."  Second; 
those  which  require  that  the  payment  of  compensation  shall 
be  secured  in  some  way,  but  leave  the  method  of  security  to 
the  option  of  the  employer.  The  choice  is  usually  between 
insurance  in  a  state  fund,  in  privately  managed  mutual  asso- 
ciations, in  stock  companies,  and  the  privilege  of  carrying 
one's  own  insurance  subject  to  the  approval  of  specified  ad- 
ministrative authorities.  All  of  these  options  are  not  open  to 
the  employer  in  the  states  which  require  insurance,  for  in 
some  of  those  states  no  state  fund  is  established,  so  in  those 
states  the  choice  is  between  mutual  associations,  stock  com- 
panies, and  self  insurance.  Third ;  those  states  in  which 
there  is  no  compulsion  to  insure,  but  the  matter  of  insurance 
is  left  wholly  optional  with  the  employer. 

Only  a  few  of  the  states  are  committed  to  the  policy  of  a 
state-managed  insurance  fund  to  the  exclusion  of  all  other 
forms  of  insurance,  and  only  a  few  more  leave  it  wholly 
optional  with  the  employer  as  to  whether  to  carry  insurance 
or  not,  so  the  prevailing  policy  of  our  compensation  system 
at  the  present  time  as  to  its  insurance  features  is  that  of  a 
compulsion  to  insure  with  a  choice  of  the  method  of  insurance. 
The   only   innovation  which  the  system   introduced   in  the 


IN'SURANCE  OF  THE  OBLIGATIOl^         159 

existing  insiTrance  institutions  was  the  establishment  of  the 
state  funds,  for  mutual  associations  and  stock  companies  were 
already  in  existence  for  the  purpose  of  protecting  the  legal 
liability  of  the  employer,  and  as  prior  to  compensation  the 
matter  of  the  insurance  of  his  liability  was  wholly  optional 
with  the  employer  as  far  as  any  element  of  legal  compulsion 
was  concerned,  he  was  at  liberty  to  assume  his  o\\ti  risk  if 
he  cared  to  do  so.  The  insurance  requirements  of  the  com- 
pensation laws,  however,  introduced  an  innovation  in  the 
principle  of  the  insurance  of  this  obligation  in  two  essential 
particulars.  In  the  first  place  the  employer  was  required 
to  protect  the  liability  imposed  upon  him  by  the  compensa- 
tion system  bv  insurance  or  security  of  some  sort,  and  in 
the  next  place  the  insurance  or  security  was  directly  for  the 
benefit  of  the  injured  employees  rather  than  for  the  indemni- 
fication of  the  employer  for  any  loss  that  he  might  sustain 
by  reason  of  the  liability  imposed  on  him  by  law,  as  was  the 
case  with  the  employer's  liability  insurance  contract  under 
the  common  law  system. 

It  was  noted  in  the  preceding  chapter  that  as  far  as  any 
foreigTi  precedents  are  concerned  the  insurance  and  the  ad- 
ministrative features  of  our  compensation  laws  may  be  con- 
sidered as  an  adaptation  from  the  German  system,  but  this 
resemblance  is  remote  rather  than  direct  and  is  more  in 
principle  than  in  practice  or  detail.  Most  of  the  nations 
which  had  adopted  the  compensation  principle  prior  to  its 
adoption  in  the  United  States  had  provided  for  some  system 
of  insurance,  but  the  English  law  and  the  laws  of  the  English 
colonies  which  had  followed  that  law  as  a  precedent  had  not 
made  insurance  compulsory  but  had  left  that  matter  optional 
with  the  employer,  so  that  the  systems  adopted  in  the  Eng- 
lish-speaking countries  prior  to  the  enactment  of  the  laws  in 
the  United  States  had  been  defective  in  principle  in  this 


160  WOKKMEN'S  COMPENSATION 

particular.     It  remaiued,  therefore^,  for  the  United  States  to 
remedy  this  defect. 

The  practice  on  the  part  of  employers  of  protecting  their 
liability  under  the  common  law  system  by  emplo^^ers'  liability 
insurance  was  prevalent  before  the  adoption  of  the  compensa- 
tion system,  and  as  an  underwriting  practice  it  may  seem 
as  if  the  insurance  of  the  compensation  obligation  is  only  the 
logical  under\^Titing  successor  of  the  practice  of  protecting 
the  common  law  obligation  by  insurance,  but  the  difference 
between  the  basis  of  the  contract  written  to  protect  the  com- 
mon law  liability  and  that  written  to  cover  the  compensa- 
tion obligation  is  so  radical  that  this  difference  should  be 
thoroughly  understood  before  considering  any  of  the  princi- 
ples of  compensation  underwriting. 

The  practice  of  employers'  liability  insurance  had  its  in- 
ception in  England  shortly  after  the  passage  of  the  Employ- 
ers' Liability  Act  in  1880,  and  it  was  introduced  in  the 
United  States  within  a  few  years  after  its  inception.  As 
the  changing  legal  and  social  conditions  increased  the  liability 
of  the  employer  to  his  employees  for  occupational  injuries  the 
protection  of  that  liability  by  insurance  of  this  nature  became 
prevalent,  and  almost  universal  in  many  parts  of  the  United 
States  and  in  many  different  lines  of  employment.  When 
the  compensation  laws  were  passed  the  different  companies 
which  had  been  writing  employers'  liability  insurance  were 
in  a  position  to  assume  the  liability  imposed  on  employers 
by  the  adoption  of  this  system,  in  those  states  in  which  in- 
surance was  required  but  the  choice  of  institutions  was  left 
with  the  employer  and  in  those  in  which  the  matter  of  in- 
surance was  wholly  optional  with  the  employer.  This  form 
of  insurance  was  barred  to  the  private  companies  in  those 
states  which  adopted  the  principle  of  a  state-managed  fund 
to  the  exclusion  of  all  other  methods. 


INSURAI^CE  OF  THE  OBLIGATION"        161 

The  contract  which  was  written  to  protect  the  obligation 
imposed  on  the  employer  by  the  common  law  system  of  em- 
ployers' liability,  or  '^employers'  liability"  insurance  as  dis- 
tinguished from  ^'compensation"  insurance,  was  a  contract 
which  was  made  between  the  employer  and  the  insurer  solely 
for  the  benefit  of  the  employer,  and  all  of  these  contracts  were 
subject  to  certain  conditions  and  limitations  which  were  elimi- 
nated in  the  underwriting  of  the  compensation  obligation. 
It  has  already  been  noted  that  the  compensation  system  intro- 
duced an  innovation  in  the  insurance  principle  in  two  essen- 
tial particulars,  and  these  particulars  must  be  emphasised  in 
the  consideration  of  the  subject  of  the  insurance  of  the  obliga- 
tion imposed  on  employers  by  that  system. 

The  element  of  compulsion  to  insure  was  a  radical  innova- 
tion, for  while  hitherto  the  legal  and  social  conditions  had 
made  it  advisable  for  employers  in  many  sections  of  the 
United  States  to  protect  their  liability  by  insurance,  still 
it  was  entirely  optional  with  each  individual  employer,  as 
far  as  any  element  of  legal  compulsion  was  concerned,  as  to 
whether  or  not  he  should  carry  employer's  liability  insurance. 
With  the  introduction  of  the  compensation  system,  however, 
and  with  the  liability  of  the  employer  to  pay  compensation 
absolutely  fixed  if  he  became  subject  to  the  operation  of  the 
system,  either  by  compulsion  or  by  voluntary  action,  it  became 
one  of  the  fundamental  principles  of  that  system  that  the 
payment  of  the  obligation  which  it  imposed  should  be  guaran- 
teed by  security  of  some  sort;,  and  the  only  way  in  which  this 
object  could  be  effected  was  by  adopting  the  principle  of 
compulsory  insurance,  so  such  provisions  were  inserted  in 
the  laws  and  we  have  the  element  of  compulsion  to  insure  in 
the  compensation  system  in  place  of  the  option  to  insure  in 
the  common  law  system. 

The  other  essential  particular  in  which  compensation  in- 


162  WORKMEN'S  COMPENSATION 

surance  differs  from  employers'  liability  insurance  is  tliat 
the  employers'  liability  policy  was  written  primarily  for  the 
protection  of  the  employer  while  the  compensation  policy  is 
written  primarily  for  the  protection  of  the  employee.  Under 
the  employers'  liability  policy  the  injured  employee  had  no 
rights  against  the  insurer.  The  theory  of  this  form  of 
underwriting  was  that  the  insurer  reimbursed  the  insured 
after  the  payment  of  a  judgment  for  any  loss  which  he  might 
have  sustained  by  reason  of  his  legal  liability  to  an  injured 
employee.  Under  this  theory  no  loss  had  been  sustained  un- 
less a  judgment  had  actually  been  satisfied  by  the  employer, 
so  it  was  inconsistent  with  the  idea  that  a  successful  plain- 
tiff could  proceed  directly  against  the  insurer  for  the  re- 
covery of  his  judgment,  and  the  employers'  liability  policy, 
in  theory  at  least,  afforded  him  no  security  for  the  payment 
of  his  judgment. 

The  result  of  the  operation  of  this  theory  was  that  if  an 
employer  was  unable  to  satisfy  a  judgment  which  an  em- 
ployee had  obtained  against  him  the  employee  had  no  recourse 
against  the  insurer  and  the  effect  of  the  recovery  of  the 
judgment  was  lost.  The  courts  held  when  this  question  was 
presented  to  them  that  the  employers'  liability  policy  was 
a  contract  of  indemnity  between  the  employer  and  the  in- 
surer, that  the  employee  was  not  a  party  to  it,  and  that,  there- 
fore, he  had  no  rights  against  the  insurer  for  the  recovery 
of  a  judgment.  A  contract  of  this  nature  might  have  nulli- 
fied the  purpose  of  the  compensation  laws,  so  in  the  provisions 
regarding  the  insurance  of  the  obligation  which  were  inserted 
in  those  laws  it  was  specified  that  the  insurance  was  for  the 
benefit  of  the  injured  employees  who  were  entitled  to  com- 
pensation, that  the  insurer  must  assume  all  of  the  obligations 
placed  on  the  employer  by  the  compensation  laws,  and  that 
an  employee  might  proceed  directly  against  the  insurer  for 


INSUEANCE  OF  THE  0BLIGATI0:N"        163 

the  recovery  of  compensation  if  this  course  was  necessary.-^ 
The  provisions  of  the  employers'  liability  contract  were 
wholly  a  matter  of  agreement  between  the  insurer  and  the 
insured.  It  was  in  the  first  place  optional  with  an  employer 
as  to  whether  he  should  carry  this  form  of  insurance  or  not, 
and  if  he  chose  to  protect  his  legal  liability  the  provisions 
of  the  contract  were  the  subject  of  agreement  between  him 

1  While  the  courts  in  some  of  the  states  have  on  various  grounds  held 
that  a  successful  plaintiff  could  proceed  directly  against  an  insurance 
company,  the  better  authority  has  sustained  the  position  of  the  liability 
companies  in  this  matter.  In  the  case  of  Frye  v.  Bath  Gas  dc  Electric 
Co.,  97  Maine  241,  54  Atl.  395,  the  complainant  sought  by  a  bill  in 
equity  to  force  an  insurance  company  to  pay  a  judgment  that  he  had 
secured  against  the  Bath  Gas  &  Electric  Co.,  that  concern  being  in  the 
hands  of  assignees  who  had  made  no  effort  either  to  pay  the  judgment 
or  to  compel  the  insurance  company  to  pay  it.  The  bill  was  dismissed, 
the  court  sustaining  the  contention  of  the  insurance  company  that  there 
was  no  privity  of  contract  between  it  and  the  plaintiff  in  tliis  action 
and  in  the  negligence  suit.  See  also  Connolly  v.  Bolster,  187  Mass. 
266,  72  N.  E.  981,  where  a  similar  state  of  facts  was  involved  and  a 
similar  conclusion  reached,  and  Allen  v.  /Etna  Life  Insurance  Co.,  145 
Fed.  881,  in  which  the  Circuit  Court  of  Appeals  held  that  an  insurance 
company  could  not  be  garnisheed  by  the  plaintiff  in  a  personal  injury 
suit.  That  the  insurance  money  even  in  the  hands  of  the  insured  can- 
not be  charged  with  any  trust  for  the  payment  of  the  judgment  is  shown 
in  the  case  of  Bain  v.  Atkins,  181  Mass.  240,  63  N.  E.  414.  In  this  case 
a  question  of  coverage  had  been  raised  and  the  insurance  company  had 
taken  a  policy  release  from  the  insured  for  a  substantial  consideration. 
The  insured  used  this  money  in  his  business,  and  was  then  unable  to 
satisfy  the  judgment  obtained  against  him.  It  was  held,  to  use  the 
language  of  the  court,  that  "the  only  correct  statement  of  the  situation 
is  simply  that  the  insurance  was  a  matter  wholly  between  the  company 
and  Atkins,  in  which  tlie  plaintiff  had  no  legal  or  equitable  interest, 
any  more  than  in  any  other  property  belonging  absolutely  to  Atkins." 

In  view  of  these  decisions  some  states  have  passed  statutes  that  make 
an  insurance  company  which  issues  a  contract  protecting  the  liability 
of  an  insured  absolutely  liable  when  a  judgment  has  been  secured,  and 
allow  a  judgment  creditor  to  proceed  directly  against  the  insurer  if  he 
is  unable  to  collect  the  judgment  from  the  defendant.  For  an  example 
of  a  statute  of  this  nature  see  the  Massachusetts  statute,  Chapter  ^64, 
Acta  of  1914. 


164  WORKMEN'S  COMPENSATION" 

and  his  insurer.  The  supervision  which  the  state  exercised 
over  the  agreement  was  only  to  the  extent  of  seeing  that  each 
party  to  the  contract  fulfilled  his  agreement,  and  it  was  no 
concern  of  the  state  if  the  contract  contained  provisions 
which  limited  the  liability  of  the  insurer  to  a  certain  definite 
sum,  or  provisions  which  exempted  the  insurer  from  any 
responsibility  under  the  contract  if  certain  conditions  were 
shown.  The  principal  concern  which  the  state  had  in  the 
matter  was  as  to  the  solvency  of  the  insurance  company  and 
its  financial  ability  to  carry  out  any  contract  which  it  might 
make. 

With  the  adoption  of  the  compensation  system  the  attitude 
of  the  state  towards  this  form  of  insurance  was  changed. 
The  obligations  imposed  by  the  system  must  be  fulfilled, 
so  insurance  or  security  was  made  compulsory,  and  the  in- 
surance must  be  for  the  benefit  of  those  entitled  to  indemnity 
under  the  law.  The  state,  therefore,  assumed  sufficient  con- 
trol over  the  form  and  substance  of  the  contracts  which  are 
issued  to  secure  the  compensation  obligations  to  see  that  the 
objects  of  the  system  are  accomplished,  and  so  the  laws 
usually  specify  certain  provisions  which  must  be  incorporated 
in  all  insurance  contracts  that  are  made  to  assume  this  obli- 
gation. In  order  that  the  contracts  may  be  in  conformity 
with  the  requirements  of  the  law  it  is  usual  to  provide  that 
any  policy  form  which  is  to  be  written  in  a  given  state  must 
have  the  approval  of  some  state  official  before  it  can  be  issued 
to  a  compensation  policyholder. 

For  the  purpose  of  illustration  it  may  be  well  to  outline 
the  insurance  provisions  of  some  one  of  the  compensation 
laws,  and  the  New  York  act  is  the  one  which  will  be  used 
for  that  purpose.^     This  law  requires  that  the  employer  shall 

iThe  Compensation  Law  of  New  York  is  Chapter  67  of  the  Consoli- 
dated Laws.  The  insurance  requirements  are  found  in  Article  III,  Sec- 
tions 50-54, 


INSURANCE  OF  THE  OBLIGATION        165 

secure  compensation  to  his  employee  either  by  insuring  and 
keeping  insured  in  the  state  fund ;  or  by  insuring  and  keep- 
ing insured  in  some  stock  corporation  or  mutual  association 
authorised  to  transact  the  business  of  workmen's  compensa- 
tion insurance  in  the  state;  or  on  satisfactory  proof  to  the 
State  Industrial  Commission  of  his  financial  ability  to 
pay  such  compensation  himself  the  commission  may  allow 
him  to  assume  this  obligation.  The  commission  may,  in 
its  discretion,  require  an  employer  who  has  received  per- 
mission to  carry  his  own  insurance  to  deposit  securities  to 
secure  his  liability,  and  it  may  at  any  time  for  good  cause 
revoke  this  permission.  Those  states  which  have  established 
a  state  fund  usually  specify  the  requirements  concerning  the 
care  and  management  of  the  fund  with  considerable  detail. 
These  requirements  concerning  the  New  York  Fund  are 
found  in  Article  V,  Sections  90-106. 

Failure  to  comply  with  the  insurance  requirements  of  the 
act  subjects  an  employer  to  two  specific  penalties.  In  the 
first  place  he  is  liable  to  the  state  fund  for  an  amount  equal 
to  the  pro  rata  premium  which  would  have  been  payable  for 
the  period  of  non-compliance,  but  the  commission  may  in 
its  discretion  remit  this  penalty.  In  the  next  place  an  in- 
jured employee  of  such  an  employer,  or  the  dependents  or 
legal  representatives  of  a  deceased  employee  in  fatal  cases, 
may  elect  to  proceed  against  the  employer  for  compensation 
as  provided  in  the  act  or  for  damages  at  common  law,  and  if 
the  latter  procedure  is  chosen  the  employer  is  barred  from 
the  defence  of  contributory  negligence,  the  fellow-servant 
rule,  and  that  of  assumption  of  risk,  so  that  his  liability  is 
practically  absolute,  and  the  only  remaining  element  in  the 
case  is  that  of  the  assessment  of  damages. 

Inasmuch  as  it  is  one  of  the  principles  of  compensation 
that  industr}^  shall  bear  the  expense  of  industrial  accidents 


166  WORKMEN'S  COMPENSATION 

as  one  of  the  elements  of  the  cost  of  production,  it  is  incon- 
sistent with  that  principle  that  any  part  of  the  cost  of  this 
system  should  be  placed  on  the  employee,  so  it  is  usually  pro- 
vided in  the  laws  that  any  agreement  on  the  part  of  an  em- 
ployee to  bear  any  portion  of  the  premium  paid  for  compensa- 
tion insurance  shall  be  void,  and  some  penalty  is  usually 
imposed  on  an  employer  who  makes  any  such  agreement  with 
his  employees,  or  makes  any  deduction  from  their  wages  for 
this  purpose.  Agreements  of  this  nature  are  forbidden  by 
the  New  York  law. 

The  employer  who  has  secured  the  payment  of  compensa- 
tion in  the  manner  required  by  the  law  must  post  and  main- 
tain notices  to  that  effect,  in  form  prescribed  by  the  com- 
mission, in  conspicuous  positions  in  and  about  his  place  of 
business.  An  employer  who  has  insured  in  the  state  fund 
in  New  York  is  then  relieved  from  liability  for  injuries  to 
employees  which  come  within  the  provisions  of  the  law,  and 
the  employee  has  no  recourse  against  the  employer  but  against 
the  fund.  An  employer  is  not  otherwise  relieved  from  liabil- 
ity for  compensation  except  by  pa^rment  of  the  compensation 
himself  or  by  his  insurance  carrier. 

The  policy  must  contain  a  provision  which  allows  the  com- 
mission to  enforce  any  rights  against  the  insurance  carrier 
for  the  benefit  of  the  person  entitled  to  compensation.  It 
must  also  contain  a  provision  which  makes  notice  of  the 
injury  on  the  part  of  the  employer  notice  on  the  part  of  the 
insurer.  This  is  in  contrast  with  the  provision  in  the  em- 
ployer's liability  policy  which  required  immediate  notice  to 
the  insurer  of  any  accident  which  may  happen,  and  by  virtue 
of  which  the  insurer  has  the  right  to  exemption  from  re- 
sponsibility under  the  policy  if  notice  is  not  given  as  re- 
quired. The  insurance  carrier  is  made  subject  to  any  orders 
which  may  be  made  against  the  employer  for  the  payment  of 


INSURANCE  OF  THE  OBLIGATION        167 

compensation,  and  the  policy  must  contain  a  provision  that 
the  insolvency  or  bankruptcy  of  the  employer  shall  not  re- 
lieve the  insurance  carrier  from  liability  under  the  policy. 

The  New  York  act  does  not  require  in  so  many  words  that 
the  insurer  shall  assume  all  of  the  liability  of  the  employer 
under  the  compensation  law.  Many  of  the  laws  contain 
specific  requirements  that  an  insurer  must  assume  the  entire 
compensation  obligation,  and  while  the  New  York  law  is  not 
thus  specific  it  is  specific  enough  so  that  no  limitation  in  the 
obligation  is  permitted.  This  principle  of  a  limitation  of 
liability  was  universal  in  the  employer's  liability  contract, 
the  standard  limits  of  financial  responsibility  for  the  pay- 
ment of  judgments  being  five  thousand  dollars  for  an  accident 
involving  injuries  to  one  person  only  and  ten  thousand  dollars 
for  an  accident  involving  injuries  to  more  than  one  person. 
These  limits  are  often  varied,  and  they  might  be  much  larger 
in  some  policies,  but  this  principle  of  limitation  of  liability 
was  one  of  the  fundamental  principles  in  the  underwriting  of 
the  employer's  liability  contract.^ 

The  result  of  this  practice  was  that  when  a  catastrophe 
happened  and  a  large  number  of  employees  were  injured  the 
limit  under  the  employer's  liability  policy  was  usually  in- 
sufficient to  protect  the  employer  for  the  damages  which  he 

1  The  question  of  the  validity  of  this  limitation  in  the  employer's 
liability  policy  has  been  before  the  courts  a  number  of  times,  and  the 
courts  have  uniformly  held  with  the  insurance  companies  and  in  favour 
of  the  limitation.  The  contention  has  been  that  when  an  insurer  electa 
to  contest  a  suit  rather  than  settle  within  the  policy  limit  it  waives  its 
right  to  take  advantage  of  the  limit  after  a  judgment  in  excess  of  the 
limit  has  been  sustained,  but  this  contention  on  the  part  of  policj'- 
holders  has  been  overruled.  Bumford  Falls  Paper  Co.  v.  Fidelity  d 
Casualty  Co.,  92  Maine  574,  43  Atl.  503;  Munro  v.  Maryland  Casualty 
Co.,  96  N.  Y.  Supp.  705;  Maryland  Casualty  Co.  v.  Omaha  Electric  Light 
d  Power  Co.,  157  Fed.  514;  Schmidt  v.  The  Travelers  Insurance  Co.,  244 
Pa.  286,  90  Atl.  653,  52  L.  R.  A.   (N.  S.)    126. 


168  WORKMEN'S  COMPENSATION 

might  be  obliged  to  pay,  and  so  if  he  was  unable  to  stand  the 
excess  over  the  limit  of  his  insurance  the  injured  employees, 
or  their  dependents  or  personal  representatives,  had  no  re- 
dress. In  order  that  such  a  situation  might  not  arise  under 
compensation  the  laws  have  provided  against  any  limitation 
of  liability,  so  the  insurer  must  assume  the  entire  liability 
imposed  on  an  employer  by  the  compensation  law,  and  in  case 
of  a  catastrophe  liquidate  all  of  the  claims  which  arise  under 
the  compensation  law. 

The  nature  and  extent  of  the  liability  which  the  insurer  is 
obliged  to  assume  under  the  compensation  system  make  it 
imperative  that  any  institutions  which  are  permitted  to  as- 
sume this  obligation  must  be  well  fitted  to  discharge  the  re- 
quirements of  the  compensation  laws  and  financially  able  to 
liquidate  all  of  their  obligations.  Their  liability  is  unlimi- 
ted, and  as  catastrophes  may  occur  in  connection  with  in- 
dustrial operations  that  result  in  injuries  to  or  the  death 
of  hundreds  of  employees  an  insurer  may  be  called  upon  at 
any  time  to  put  aside  in  its  reserves  large  amounts  to  hold 
against  the  payment  of  claims  on  account  of  such  calamities, 
and  the  obligation  to  make  these  payments  may  extend  over 
a  considerable  period  of  time,  for  some  of  the  laws  require 
payments  without  any  limit  as  to  time  in  cases  of  permanent 
disability  and  to  the  dependents  during  the  continuance  of 
disability  in  fatal  cases,  so  the  insurer  who  underwrites  the 
compensation  obligation  must  not  only  possess  financial  sta- 
bility but  the  prospect  of  existence  long  enough  to  discharge 
the  obligations  assumed.  The  emplo^^er  is  not  necessarily 
discharged  from  his  obligations  under  the  compensation  law 
by  insuring  as  required,  for  if  for  any  reason  the  insurer  is 
unable  to  meet  the  obligations  the  employer  is,  as  a  general 
rule,  liable  for  them,  but  the  discharge  of  the  obligations  by 
the  insurer  automatically  releases  the  employer  from  any 


INSURANCE  OF  THE  OBLIGATION        169 

further  responsibility.  It  is,  therefore,  a  matter  of  great 
importance  to  all  parties  interested  that  the  insurer  be  able 
to  perform  all  of  the  obligations  which  it  assumes. 

It  is  important  that  the  right  of  cancellation  of  a  compen- 
sation policy  shall  be  properly  regulated.  It  is  customary  to 
insert  in  practically  all  insurance  policies,  with  the  exception 
of  the  life  policy,  an  option  which  allows  the  insurer  to  cancel 
the  insurance,  and  in  the  absence  of  any  statutory  require- 
ments the  provisions  regarding  cancellation  are  subject  to 
the  agi'eement  of  the  parties.  Cancellation  cannot,  of  course, 
relieve  the  insurer  of  any  liabilities  which  may  have  accrued 
under  the  contract  up  to  the  time  of  cancellation,  but  this 
procedure  will  relieve  the  insurer  from  any  further  responsi- 
bility after  the  date  when  cancellation  becomes  effective.  It 
is  usual  for  the  compensation  laws  to  specify  the  provisions 
respecting  cancellation  which  must  be  inserted  in  the  com- 
pensation policy,  so  that  an  employer  will  not  be  deprived  of 
his  insurance  by  any  sudden  or  arbitrary  action  on  the  part 
of  the  insurer,  for  when  the  insurance  company  desires  to 
cancel  a  compensation  policy  it  should  be  compelled  to  give 
due  notice  to  the  employer  in  order  that  he  may  have  an 
opportunity  to  place  his  insurance  in  some  other  company 
before  the  cancellation  is  effective.  The  New  York  law  pro- 
vides that  an  insurance  carrier  desiring  to  cancel  a  compensa- 
tion contract  must  file  at  least  a  ten  days'  notice  with  the 
commission,  and  serve  the  same  notice  on  the  employer.  The 
right  of  a  private  company  to  cancel  is  not  restricted,  but 
insurance  in  the  state  fund  can  be  cancelled  only  for  non- 
payment of  premiums. 

Much  of  the  agitation  in  the  United  States  regarding  the 
adoption  of  the  compensation  system  has  centred  around  the 
form  of  insurance  which  should  be  permitted  to  secure  the 
obligation.     The  fact  that  insurance  of  some  sort  is  necessary 


lYO  WOEKME^'S  COMPENSATION 

in  order  that  the  operation  of  the  system  may  be  successful 
was  generally  admitted,  and  there  was  much  discussion  when 
the  laws  were  under  discussion  as  to  the  manner  in  which  it 
might  be  permissible  to  obtain  the  required  insurance.  In- 
asmuch as  the  system  imposed  additional  financial  burdens 
of  a  compulsory  nature  on  the  employer  the  object  was  to 
make  those  burdens  as  light  as  possible  by  keeping  the  in- 
surance premiums  down  to  a  minimum,  but  while  the  pre- 
miums must  be  kept  as  low  as  possible  the  insurance  insti- 
tutions must  possess  both  financial  stability  and  permanence 
in  order  to  discharge  the  obligations  which  they  assumed,  so 
this  factor  of  the  insurance  of  the  obligation  has  been  one  of 
the  principal  subjects  of  contention  in  the  compensation 
movement  in  this  country.  The  issue,  in  brief,  has  been  as 
to  whether  the  private  companies,  either  stock  or  mutual, 
should  be  permitted  to  write  this  form  of  insurance,  or 
whether  the  insurance  should  be  written  in  a  state-managed 
fund  to  the  exclusion  of  all  other  institutions. 

When  the  requirements  regarding  the  insurance  of  the 
compensation  obligation  began  to  be  considered  in  this  coun- 
try much  opposition  developed  in  some  of  the  states  to  the 
peiTTiission  of  this  form  of  insurance  by  stock  companies. 
The  companies  which  had  been  vn'iting  employers'  liability 
insurance  for  those  employers  who  chose  to  insure  were  in  a 
position  to  assume  the  obligations  which  were  imposed  on 
employers  by  the  compensation  system,  but  such  opposition 
developed  to  their  being  permitted  to  do  so  that  in  some  states 
funds  were  established  under  the  management  of  the  state 
which  assumed  the  exclusive  control  of  compensation  insur- 
ance and  in  other  states  such  funds  were  established  to  com- 
pete for  this  business  with  private  companies.  The  reasons 
for  the  opposition  to  compensation  insurance  by  stock  com- 
panies may  be  reduced  to  two  general  specifications :     First ; 


INSURANCE  OF  THE  OBLIGATION         171 

the  alleged  excessive  profits  of  the  private  companies  which 
had  been  writing  employers'  liability  insurance.  Second ; 
the  alleged  practices  of  the  companies  in  the  adjustment  of 
claims  which  were  made  under  those  policies.  The  first 
specification  is  predicated  upon  a  misinterpretation  or  a 
partial  interpretation  of  liability  statistics ;  the  second  upon 
a  misunderstanding  of  the  purpose  of  the  contract  which 
assumed  the  common  law  obligations  of  the  employer  as 
between  employer  and  insurer. 

The  allegation  as  to  the  excessive  profits  of  the  companies 
writing  employers'  liability  insurance,  from  that  class  of 
business,  is  based  upon  the  assumption  that  a  large  part  of 
the  proportion  of  the  premiums  over  and  above  the  proportion 
paid  out  to  claimants  was  clear  profit.  This  assumption  was 
usually  based  on  the  theory  that  the  loss  ratio  was  much  less 
than  that  actually  sustained,  and  the  only  answer  to  the 
allegation  is  that  it  was  not  so.  It  is  possible  that  in  the 
early  days  of  liability  underwi-iting  some  of  the  companies 
may  have  made  some  money  from  their  employers'  liability 
business,  but  as  the  volume  of  employers'  liability  litigation 
increased,  as  laws  were  passed  which  increased  the  liability 
of  the  employer,  as  the  courts  became  more  favourable  to 
plaintiffs,  as  verdicts  became  larger  and  larger,  and  as  the 
claims  of  injured  employees  increased  both  in  number  and 
amount,  the  different  elements  of  uncertainty  involved  made 
it  exceedingly  difficult  for  a  company  to  determine  definitely 
at  any  given  time  whether  it  was  making  any  money  from 
its  employers'  liability  business  or  not,  and  the  general  im- 
pression of  the  managers  of  these  companies  was  that  they 
were  fortunate  if  the  combined  losses  and  expenses  of  the 
business  did  not  consume  all  of  the  premium  income.^ 

1  It  was  hard  to  fix  any  definite  and  reliable  loss  ratio  for  employers' 
liability  insurance  because  of  the  indefiniteness  of  the  liability  which 


172  WORKMEN'S  COMPENSATION 

The  criticism  which  was  directed  against  the  liability  com- 
panies because  of  their  alleged  practices  in  the  adjustment 
of  claims  under  employers'  liability  policies  was  based  largely 
upon  a  misconception  of  the  purpose  of  this  form  of  insur- 
ance, for  many  who  did  not  understand  the  object  of  the 
contract  assumed  that  it  provided  accident  insurance  for  each 
and  every  employee  who  might  be  injured  in  the  course  of 
employment  rather  than  protection  for  the  employer  as  to 
his  legal  liability  for  claims  made  against  him  by  injured 
employees.  The  result  of  this  misunderstanding  was  that 
when  a  liability  company  refused  to  settle  with  a  claimant 
because  of  the  fact  that  his  claim  presented  no  merit  from 
the  standpoint  of  legal  liability,  it  was  assumed  by  those  who 
did  not  understand  the  purpose  of  the  insurance  that  the 
company  was  attempting  to  evade  its  obligations.  It  might 
also  be  assumed  that  a  company  was  not  discharging  its 
obligations  when  it  failed  to  settle  claims  in  which  the  liabil- 
ity is  doubtful,  or  claims  in  which  the  liability  is  clear,  but 
the  answer  to  this  assumption  is  that  the  insurance  company 
under  its  contract  is  placed  in  the  same  position  as  the  em- 
ployer and  it  has  the  same  right  that  the  employer  has  either 
to  recognise  liability  and  settle  or  to  deny  liability  and  con- 

the  contract  was  written  to  protect.  For  illustrative  purposes  it  may 
be  said  that  the  business  was  usually  written  on  the  basis  of  an  assumed 
loss  ratio  for  claim  payments  of  forty-five  per  cent  and  an  expense  ratio 
of  fifty-five  per  cent,  so  that  if  either  ratio  exceeded  the  assumption  and 
the  other  remained  at  the  assumption  the  business  was  conducted  at  a 
loss.  It  might  be  possible  to  regulate  the  expense  ratio  at  times,  but 
regulation  of  the  loss  ratio  was  practically  impossible  because  it  de- 
pended on  factors  beyond  the  control  of  the  insurance  company,  for 
the  insurer  had  little  or  no  control  over  legal  conditions  in  a  given 
community.  The  approximate  division  of  the  expense  ratio  of  fifty-five 
per  cent  was  twenty-five  per  cent  for  agents'  commissions,  fifteen  per  cent 
for  home  office  expense,  and  fifteen  per  cent  for  adjustment  and  legal 
expense.  These  ratios  and  the  sub-divisions  of  the  expense  ratio  are 
only  approximate,  but  they  are  sufficient  for  purposes  of  illustration. 


INSURANCE  OF  THE  OBLIGATION        1Y3 

test.  The  demands  which  were  made  upon  insurance  com- 
panies in  liability  cases  were  usually  so  large  that  an  em- 
ployer would  never  have  settled  for  the  amounts  demanded 
and  so  insurers  have  exercised  the  same  options  that  em- 
ployers would  have  exercised.  The  indefiniteness  of  the 
liability  which  the  common  law  imposed  on  the  employer  has 
made  the  matter  of  the  settlement  of  employers'  liability 
claims  a  subject  of  much  speculation  and  negotiation,  so 
the  companies  have  had  to  submit  to  the  conditions  which 
they  found  regardless  of  the  criticism  which  they  might  en- 
counter. 

The  fundamental  problem  in  compensation  insurance  is  to 
classify  the  different  occupations  so  that  those  with  similar 
hazards  shall  be  classed  together  and  each  class  shall  bear 
its  own  losses  and  not  be  compelled  to  contribute  to  the  losses 
of  more  hazardous  classes,  and  then  to  fix  the  premium  for 
each  classification  at  a  rate  which  is  sufficient  to  care  for  all 
of  the  losses  of  that  classification.  The  obligations  which 
may  arise  under  a  compensation  policy  are  likely  to  extend 
over  a  considerable  period  of  time,  so  the  premium  rate  on 
any  classification  for  a  given  policy  period  must  in  theory 
be  sufficient  to  liquidate  all  of  the  obligations  which  accrue 
during  that  period.  This  necessitates  the  holding  of  con- 
siderable sums  in  reserve  against  the  payments  which  are 
deferred.  It  is  necessary,  therefore,  that  the  premium  shall 
be  sufficient  to  cover  all  of  the  payments  which  may  have 
to  be  made  during  the  policy  period  and  the  reserves  which 
have  to  be  carried  to  meet  the  deferred  obligations  as  they 
become  due. 

In  an  endeavour  to  make  compensation  rates  fair  and 
equitable  to  both  employer  and  insurer,  and  to  keep  them  as 
low  as  possible,  a  provision  has  been  inserted  in  the  laws 
in  some  of  the  states  requiring  supervision  of  the  rates  by 


1Y4  WOKKMEN'S  COMPENSATION 

some  state  official.  This  provision  is  usually  to  the  effect 
that  the  official  named  shall  approve  any  rates  as  to  suffici- 
ency, and  that  no  rates  can  be  promulgated  by  an  insurer 
until  those  rates  have  been  approved  as  required  by  law, 
This  authority  is  given  in  general  terms  and  requires  ap- 
proval as  to  sufficiency  only,  but  the  specification  is  broad 
enough  to  vest  large  discretion  in  the  designated  official. 
The  power  is  one  of  the  innovations  which  the  compensation 
system  has  introduced,  for  prior  to  the  introduction  of  this 
system  the  concern  which  the  state  had  exercised  over  the 
solvency  of  an  insurance  company  did  not  extend  officially 
to  the  determination  of  rates  but  only  to  the  determination 
as  to  whether  or  not  the  reserves  maintained  were  sufficient 
to  meet  outstanding  and  deferred  obligations. 

The  designation  of  the  different  forms  of  insurance  for 
the  compensation  obligation  given  earlier  in  this  chapter  is 
that  given  in  the  laws.  The  division  of  the  insurance  insti- 
tutions into  state  funds,  stock  companies,  and  mutual  associ- 
ations is  somewhat  inaccurate  from  the  standpoint  of  the 
principle  involved,  so  before  giving  any  consideration  to  the 
arguments  for  or  against  any  particular  form  of  insurance 
this  inaccuracy  will  be  corrected.  The  division  of  institu- 
tions should  be  into  stock  companies  and  mutual  associations, 
with  a  further  division  of  mutual  associations  into  two  classes, 
the  distinction  between  the  classes  being  on  the  basis  of  the 
management,  as  to  whether  the  association  is  managed  by  the 
state  or  by  the  members  who  compose  it.  Those  managed 
by  the  state  are  the  state  funds,  and  those  managed  by  the 
members  are  the  mutual  associations  which  are  specified  in 
the  laws.  Insurance  in  a  state  fund,  or  "state  insurance" 
as  the  term  is  used  in  compensation  insurance,  is  essentially 
insurance  on  the  mutual  plan,  and  so  the  state  funds  should 
be  classified  with  the  mutual  institutions. 


INSURANCE  OF  THE  OBLIGATION        175 

It  is  as  yet  too  early  to  pass  anything  like  definite  or 
final  judgment  upon  the  best  method  of  compensation  in- 
surance, for  the  compensation  system  has  been  in  operation 
for  such  a  short  time  that  it  is  still  in  a  formative  state  so 
none  of  its  different  elements  have  approached  finality.  The 
system  itself  seems  established^  and  inasmuch  as  the  insur- 
ance of  the  obligation  is  regarded  as  one  of  the  essential 
elements  of  the  system  compensation  insurance  in  one  form 
or  another  is  an  established  institution.  Compulsion  to  in- 
sure is  deemed  necessary  in  order  that  the  system  may  be 
effective  in  operation,  and  inasmuch  as  insurance  is  com- 
pulsory in  any  complete  system  the  cost  of  insurance  should 
be  made  as  low  as  is  consistent  with  soundness  and  solidarity 
in  the  institution  which  assumes  this  obligation.  The  issue, 
therefore,  between  insurance  by  stock  companies  and  insur- 
ance on  the  mutual  plan,  either  by  a  state  fund  or  by  a 
privately  managed  association,  is  as  to  which  form  can  best 
serve  the  system,  taking  into  consideration  all  of  the  neces- 
sary elements  of  compensation  insurance. 

The  fundamental  difference  between  insurance  conducted 
by  stock  companies  and  that  conducted  by  mutual  associations 
is  that  a  stock  company  does  business  for  the  benefit  of  its 
stockholders  and  any  profits  which  may  arise  from  the  busi- 
ness belong  to  them,  while  in  a  mutual  association  the  policy- 
holders themselves  constitute  the  association  and  the  profits 
belong  to  them.  A  stock  company,  therefore,  would  assume 
a  risk  for  a  definite  premium,  and  if  the  premiums  are  in- 
sufiicient  to  pay  the  losses  and  expenses,  the  deficit  must  come 
from  the  surplus  funds  of  the  company.  In  a  mutual  associ- 
ation the  members  are  liable  to  assessment  for  the  purpose 
of  meeting  the  losses  if  the  original  premiums  are  not  suffici- 
ent. The  premium  which  a  policyholder  pays  to  a  stock 
company  is  all  that  he  is  called  upon  to  pay  for  his  pro- 


176  WORKMEN'S  COMPENSATION 

tection,  while  if  he  is  a  member  of  a  mutual  association  he 
is  liable  to  assessment  if  the  premiums  collected  in  the  be- 
ginning are  insufficient  to  liquidate  the  liabilities  of  the 
association. 

The  loss  ratio  in  compensation  insurance  is  theoretically 
the  same  in  stock  companies  and  mutual  associations,  and 
there  are  certain  elements  of  expense  of  management  and 
administration  which  must  in  theory  be  the  same.  Stock 
companies,  however,  must  have  agents  to  solicit  the  business 
and  the  agents  must  be  paid,  usually  by  a  percentage  of  the 
premium,  so  in  theory  the  state  funds,  which  employ  no 
agents,  and  private  mutual  associations  which  consist  of  em- 
ployers who  have  voluntarily  associated  themselves  together 
for  the  purpose  of  insuring  their  compensation  obligations, 
are  free  from  this  element  of  expense,  and  can,  therefore, 
conduct  the  business  on  a  cheaper  basis  than  the  stock  com- 
panies. In  addition  to  this  elimination  of  the  element  of 
agents'  commissions  the  fact  that  any  profits  which  may 
accrue  from  the  conduct  of  the  business  by  state  funds  or 
mutual  associations  which  are  privately  managed  belong  to 
the  policyholders  and  are  returned  to  them  may  appear  to 
make  the  theoretical  advantage  in  favour  of  the  conduct  of 
the  business  on  that  basis. 

In  view  of  this  apparent  theoretical  advantage  for  insur- 
ance on  the  mutual  plan  the  advocates  of  insurance  by  stock 
companies  must  show  that  the  practical  advantages  are  with 
the  stock  companies  if  they  wish  to  succeed  in  competition 
with  the  mutual  associations.  Insurance  is  a  technical  busi- 
ness, and  those  who  conduct  it  must  have  special  training 
for  their  duties  and  responsibilities.  The  element  of  politics 
is  too  often  present  in  the  conduct  of  any  business  undertaken 
by  the  state,  and  this  element  is  likely  to  be  a  factor  in  the 
management  of  state  funds,  so  it  is  questionable  whether  men 


INSURANCE  or  THE  OBLIGATION        177 

can  be  obtained  for  and  retained  with  the  state  funds  who  are 
fitted  for  their  management.  The  credit  of  the  state  is  not 
behind  the  state  funds,  so  the  policyholders  are  liable  for 
assessments  for  any  deficits  that  may  arise,  and  the  same  is 
true  of  privately  managed  mutual  associations.  The  stock 
companies,  on  the  other  hand,  must  carry  the  risk  for  the 
rate  originally  charged  and  make  up  any  deficits  from  their 
surplus  funds,  so  that  the  employer  who  has  insured  his  com- 
pensation obligations  in  a  stock  company  is  not  liable  for  any 
assessments. 

As  a  practical  proposition  a  privately  managed  mutual  as- 
sociation does  not  possess  the  same  stability  as  a  stock  com- 
pany, so  such  an  association  may  suffer  in  management  as 
compared  with  the  management  of  a  stock  company.  While 
a  state  fund  may  eliminate  the  element  of  agents'  commissions 
either  by  monopolistic  control  of  compensation  insurance  or 
by  offering  that  insurance  in  competition  with  other  institu- 
tions to  any  who  may  apply  for  it,  a  privately  managed  mu- 
tual association  does  not  as  a  rule  have  this  advantage  in  com- 
petition with  stock  companies,  for  in  order  to  get  business  it 
must  have  an  agency  organisation  or  its  substitute,  so  this  ele- 
ment of  expense  is  present  both  in  the  stock  companies  and  in 
the  privately  managed  mutual  associations. 

In  summing  up  the  issue  as  to  whether  stock  insurance  or 
mutual  insurance  is  preferable  for  the  insurance  of  the  com- 
pensation obligation,  in  a  very  few  words  and  free  from  all 
theoretical  considerations,  it  may  be  said  that  the  practical 
situation  which  presents  itself  is  a  choice  between  a  contract 
which  for  a  definite  rate  assumes  all  of  the  obligations  of 
an  employer  for  a  given  policy  period,  and  membership  in 
an  association  which  promises  some  return  to  him  if  the 
premiums  collected  are  in  excess  of  the  amount  required  to 
meet  losses  and  expenses,  but  which,  on  the  other  hand,  makes 


178  WORKMEN'S  COMPENSATION 

him  liable  to  unlimited  assessments  as  a  partner  in  the  en- 
terprise if  the  premiums  are  insufficient  to  meet  the  obliga- 
tions assumed. 

EEFERENCES 

Addresses  made  at  the  fifth  annual  meeting  of  the  Liability 
Insurance  Association,  New  York,  October  19,  1911,  as  fol- 
lows :  — 

Invasion  of  the  Insurance  Field  by  the  State,  P.  T.  Sherman, 
page  5. 

State  Insurance  of  Workmen's  Compensation  for  Accidents,  F. 
E.  Law,  page  20. 

Is  the  State  to  Compensate  Injured  Workmen?  S.  H.  Wolfe, 
page  45. 

Compensation  for  Accidents  to  Workpeople — Should  It  Be  Ad- 
ministered by  the  State?  J.  S.  Rowe,  page  57. 

State  Employers'  Liability  Insurance  (or  Workmen's  Compensa- 
tion), E.  S.  Lott,  page  71. 

Eate  Making  Under  State  Supervision,  J.  T.  Stone,  page  87. 

Compulsory  Insurance,  a  Compilation  of  Selected  Articles,  To- 
gether with  a  Comprehensive  Bibliogi-aphy  on  Employers' 
Liability  and  Workmen's  Compensation,  E.  B.  Bullock. 

In  Ee:  Workmen's  Compensation  and  State  Insurance,  Brief 
Filed  by  W.  G.  Cowles  with  Committees  of  the  Connecticut 
Legislature,  1913. 

The  Case  Against  State  Insurance,  W.  H.  Hotchkiss,  The  Out- 
look, Vol.  cm,  page  487.     (March  1,  1913.) 

State  Insurance— Its  Adaptability  to  This  Country,  S.  H.  Wolfe, 
Liability  and  Compensation  Lectures,  page  109. 

Advantages  of  Compulsory  State  Insurance,  T.  J.  Duffy,  Ameri- 
can Labor  Legislation  Eeview,  Vol.  Ill,  page  247. 

Advantages  of  Casualty  Company  Insurance,  P.  T.  Sherman, 
American  Labor  Ivegislation  Eeview,  Vol.  Ill,  page  253. 

Superiority  of  Compulsory  Mutual  Insurance,  M.  M.  Dawson, 
American  Labor  Legislation  Eeview,  Vol.  Ill,  page  259, 


INSUKAKCE  OF  THE  OBLIGATION         179 

Workmen's  Compensation  Insurance,  W.  G.  Cowles,  an  Address 

Delivered  before  the  National  Electric  Light  Association, 

San  Francisco,  1915. 
The  Agency  Expense  of  Workmen's  Compensation  Insurance,  W. 

G.  Cowles,  The  Economic  World,  New  York,  1915. 
Mutual  Competition,  W.  G.  Cowles,  an  Address  Delivered  before 

the  National  Association  of  Insurance  Agents,  Boston,  1916. 
Liability  and  Workmen's  Compensation  Insurance  on  the  Eecip- 

rocal  or  Inter-Insurance  Plan,  P.  T.  Sherman,  New  York, 

1916. 


CHAPTER  IX 

THE    ADMINISTRATION    OF    COMPENSATION    LAWS 

By  placing  a  liability  on  the  employer  to  compensate  an 
employee  for  injuries  which  he  might  receive  in  the  course 
of  his  employment  and  arising  out  of  it,  except  those  caused 
by  his  wilful  or  intentional  negligence,  as  a  substitute  for 
the  common  law  liability  based  on  the  idea  of  legal  fault  on 
the  part  of  the  employer,  the  compensation  system  eliminated 
the  element  of  uncertainty  as  to  the  basis  of  liability  which 
was  one  of  the  defects  of  the  common  law  system;  by  pre- 
scribing a  definite  schedule  of  indemnity  to  be  paid  to  in- 
jured employees  or  their  dependents  the  compensation  system 
eliminated  the  element  of  uncertainty  as  to  the  amount  of 
recovery  which  was  another  defect  of  the  common  law  system ; 
and  by  requiring  that  the  payment  of  the  obligations  imposed 
by  the  compensation  system  should  be  secured  by  insurance 
of  some  sort  that  system  eliminated  the  element  of  uncer- 
tainty as  to  the  collection  of  any  judgment  that  might  be 
recovered  which  was  also  a  defect  in  the  common  law  sys- 
tem. 

Another  defect  in  the  common  law  system  which  the  com- 
pensation system  must  eliminate  in  order  to  make  its  opera- 
tion effective  was  that  of  the  litigation  which  was  necessary 
in  order  to  enforce  common  law  rights  by  legal  process.  The 
element  of  delay  which  is  an  incident  of  litigation,  together 
with  the  element  of  uncertainty  as  to  the  outcome  of  the  liti- 
gation, made  it  difficult  for  an  injured  employee  to  enforce  his 

180 


ADMINISTRATION  181 

rights  unless  lie  was  financially  able  to  stand  the  delay.  Un- 
less the  compensation  system  had  adopted  some  method  of 
eliminating  the  litigation  which  was  an  incident  of  the  com- 
mon law  system  it  would  have  been  fundamentally  defective 
from  a  practical  standpoint,  and  in  realisation  of  this  fact 
those  who  drafted  the  compensation  laws  in  the  larger  num- 
ber of  the  states  in  the  United  States  provided  a  special  form 
of  administration  for  those  laws,  and  that  administration  in 
each  state  in  which  the  law  makes  such  a  provision  is  one  of 
the  established  branches  in  the  conduct  of  the  affairs  of  the 
states. 

Some  of  the  states,  however,  have  provided  no  special  form 
of  administration  for  their  compensation  laws  but  leave  the 
matter  of  administration  to  the  courts.  It  should  be  said 
in  justice  to  those  states  that  their  laws  usually  provide  that 
all  compensation  suits  which  are  submitted  to  the  courts  shall 
be  decided  summarily  and  with  as  little  delay  as  possible, 
and  free  from  legal  technicalities,  so  in  those  states  the  effort 
has  been  made  to  eliminate  the  element  of  delay  in  legal 
procedure  which  was  one  of  the  defects  of  the  common  law 
system.  Inasmuch  as  the  states  which  leave  the  administra- 
tion of  their  compensation  laws  to  the  courts  are  in  a  minority 
the  system  of  compensation  administration  to  which  this 
country  is  committed  is  that  of  administration  by  a  special 
administrative  body. 

As  far  as  the  system  of  special  administration  for  compen- 
sation laws  which  has  been  adopted  in  the  United  States  can 
be  traced  to  any  foreign  precedent  it  may  be  stated  generally 
that  it  is  an  adaptation  of  the  German  system,  for  the  German 
laws  provide  a  special  administrative  system  for  their  com- 
pulsory social  insurance  system,  but  the  resemblance  between 
the  German  administration  and  the  administration  in  the 
United  States  is  remote  rather  than  direct.     Our  compensa- 


182  WORKMEN'S  COMPENSATION 

tion  administration  may  be  considered  as  an  adaptation  to  the 
compensation  system  of  a  form  of  administration  which  had 
been  applied  to  other  laws,  and  speaking  from  a  practical 
standpoint  it  should  be  said  that  it  was  adopted  from  appar- 
ent necessity  rather  than  from  reliance  on  any  foreign  pre- 
cedent. 

The  principle  upon  which  the  practice  of  taking  the  admin- 
istration of  certain  classes  of  law^s  out  of  the  hands  of  the 
general  executive  authorities  is  based  is  that  those  laws  re- 
quire more  detailed  attention  than  can  be  given  to  them  by 
the  authorities  entrusted  with  the  general  administration  of 
law,  and  also  that  these  laws  require  for  their  proper  admin- 
istration certain  technical  qualifications  which  are  not  as  a 
general  rule  possessed  by  the  general  executive  authorities. 
It  is  advisable,  therefore,  in  order  that  certain  laws  be  sum- 
marily and  efficiently  administered,  particularly  as  to  their 
details  and  as  to  preliminary  matters  in  which  some  decision 
as  to  their  meaning  is  necessary,  that  special  administrative 
bodies  be  entrusted  with  their  execution. 

This  form  of  administration  is  particularly  desirable  in 
cases  where  individuals  are  dealing  with  corporations  whose 
business  is  in  the  nature  of  a  public  service,  for  in  such  cases 
it  is  often  necessary  that  the  rights  and  duties  of  those  cor- 
porations be  determined  in  a  summary  manner  in  order  that 
the  interests  of  the  public  may  not  suffer,  and  that  an  in- 
dividual may  have  his  rights  against  such  a  corporation  de- 
termined without  the  necessity  of  an  appeal  to  the  courts. 
The  theory  of  this  form  of  administration  is  not  that  the 
jurisdiction  of  the  courts  is  ousted,  for  recourse  to  the  courts 
must  be  permitted  in  all  cases  where  decisions  are  necessary 
as  to  the  meaning  and  application  of  any  law,  but  the  theory 
is  that  in  many  matters  which  are  in  dispute,  particularly 
questions  of  fact  in  which  no  very  important  issues  of  law  are 


ADMINISTRATION  183 

involved  and  questions  where  the  meaning  of  the  law  may 
be  in  dispute  but  the  decision  of  any  tribunal  possessing 
jurisdiction  over  the  matter  will  be  satisfactory  to  all  parties, 
there  should  be  some  intermediate  authority  between  the 
courts  and  the  parties  who  are  in  interest  to  pass  upon  such 
disputes,  for  in  many  cases  the  rulings  of  such  an  authority 
will  be  accepted  as  final  and  the  necessity  of  litigation  in  the 
courts  obviated.  The  jurisdiction  of  these  tribunals  may  also 
be  of  a  supervisory  nature,  in  order  that  certain  laws  may  be 
executed  as  required  without  the  necessity  of  appeal  from 
parties  who  may  be  interested  in  their  execution. 

Administration  of  this  nature  has  been  provided  for  vari- 
ous classes  of  laws  in  the  United  States,  both  by  the  federal 
and  the  state  governments.  Some  of  the  most  familiar  in- 
stances are  those  which  relate  to  the  administration  of  rail- 
road laws  by  the  different  commissions,  to  the  supervision 
of  insurance,  and  to  the  supervision  of  banking.  It  was  seen 
that  this  form  of  administration  was  particularly  well  fitted 
for  the  administration  of  compensation  laws,  and  so  it  was 
applied  to  those  laws  in  the  greater  number  of  the  states. 
It  will  be  assumed,  therefore,  that  this  is  the  proper  form  of 
administration  for  compensation  laws,  and  this  chapter  will 
be  devoted  to  a  brief  consideration  of  the  administration  of 
the  laws  in  this  manner. 

This  administration  is  usually  entrusted  to  a  body  con- 
sisting of  three  or  five  members,  but  it  might  be  left  with  a 
single  official.  The  administrative  body  is  always  designated 
by  some  distinctive  name,  such  as  "The  Industrial  Accident 
Board,"  "The  Industrial  Accident  Commission,"  "The  Work- 
men's Compensation  Commission,"  or  some  similar  name. 
Tor  purposes  of  convenience  this  body  will  be  referred  to  in 
this  chapter  as  the  "commission."  The  function  of  this  com- 
mission is  to  see  that  the  compensation  laws  are  administered 


184  WOEKMEN'S  C0MPE:N"SATI0N 

properly  and  that  their  purposes  are  carried  into  execution. 
The  major  factor  in  administration  is  to  see  that  the  right 
of  an  injured  to  receive  compensation  is  determined  with  as 
little  delay  as  possible,  and  if  his  right  to  receive  it  is  estab- 
lished that  it  is  paid  as  directed  by  the  employer  or  his  in- 
surer. There  are,  however,  numerous  minor  factors  of  im- 
portance in  the  administration  of  the  laws,  such  as  receiving 
and  filing  notices  of  election  or  rejection,  the  supervision  of 
the  insurance  of  the  obligation,  and  many  other  details  to 
which  the  commission  must  give  attention.  In  those  states 
in  which  state  funds  have  been  established  the  management 
of  the  fund  is  usually  vested  in  the  commission.  This 
chapter  will  deal  only  with  the  major  factor  of  administra- 
tion, that  of  the  determination  and  adjustment  of  claims 
which  arise  under  compensation  laws. 

The  general  principle  of  administration  by  a  commission 
is  that  the  commission  shall  pass  upon  all  questions  of  dis- 
pute between  employers  and  employees  as  to  the  application 
of  the  compensation  law.  These  questions  may  involve  either 
law  or  facts.  If  a  question  of  law  is  involved  either  party 
may,  as  a  rule,  take  an  appeal  to  the  courts  to  have  the  issue 
of  law  determined,  for  a  final  decision  may  be  necessary  on 
that  question,  but  if  the  question  is  one  of  fact  only  the  de- 
cision of  the  commission  is  usually  final  and  no  appeal  is 
allowed.  Thus  the  commission  is  vested  with  the  functions 
of  both  judge  and  jury  under  the  common  law  system,  and 
in  practice  it  passes  upon  the  cases  submitted  with  as  little 
delay  as  possible  so  that  the  rights  of  the  parties  may  be 
summarily  determined.  Compensation  administration  has, 
therefore,  become  one  of  the  recognised  administrative  depart- 
ments in  those  states  which  have  adopted  a  special  form  of 
administration,  and  a  considerable  body  of  ofiicial  literature 
on  the  subject  is  already  in  existence  in  this  country  in  the 


ADMINISTKATION  185 

shape  of  reports  of  decisions  of  the  commissions  and  of  the 
courts,  and  the  reports  of  the  commissions  upon  the  general 
administration  of  the  laws. 

In  order  to  illustrate  the  organisation  and  functions  of  a 
body  vested  with  the  administration  of  a  compensation  law, 
as  thev  are  prescribed  by  statute,  it  may  be  well  to  outline 
the  provisions  of  some  one  of  the  laws  and  for  this  purpose 
the  Wew  York  law  is  the  one  chosen.^  The  administration 
of  this  law  was  vested  in  the  ''State  Workmen's  Compensation 
Commission,"  which  consisted  of  five  Commissioners  ap- 
pointed by  the  Governor,  by  and  with  the  advice  and  consent 
of  the  Senate,  for  a  period  of  five  years,  one  of  whom  should 
be  designated  by  the  Governor  as  Chairman,  and  not  more 
than  three  of  whom  should  belong  to  the  same  political  party. 
The  Commissioner  of  Labor  was  ex-officio  a  member  of  the 
commission,  but  he  did  not  have  any  vote  on  its  orders,  de- 
cisions or  awards.  Each  appointive  Commissioner  must  de- 
vote his  whole  time  to  the  duties  of  the  oflice. 

The  commission  was  authorised  to  appoint  one  or  more 
Deputy  Commissioners,  a  Secretary,  and  such  other  clerical, 

1  These  provisions  are  found  in  Article  IV,  Sections  60-77,  and  in 
Article  II,  Sections  19-20,  of  the  compensation  law,  and  outline  the 
provisions  for  the  establishment  of  the  "State  Workmen's  Compensation 
Commission"  as  originally  passed.  In  1915,  by  Chapter  674,  Laws  of 
1915,  effective  May  22,  1915,  some  changes  were  made  which  affected 
the  details  of  these  provisions  of  the  law  but  made  no  substantive 
changes.  A  bureau  was  added  to  the  Labor  Department  to  be  known 
as  the  Workmen's  Compensation  Bureau,  and  all  of  the  work  of  the  de- 
partment is  to  be  supervised  by  a  commission  called  the  "State  Indus- 
trial Commission."  This  commission  was  organi.sed  in  practically  the 
same  way  as  the  "State  Workmen's  Compensation  Commission,"  and  was 
vested  with  the  functions  of  tliat  commission  as  to  the  administration 
of  the  compensation  law.  This  change  in  New  York  may  be  regarded 
as  indicative  of  a  tendency  to  combine  the  administration  of  the  com- 
pensation laws  with  the  functions  of  the  labour  departments  in  the  dif- 
ferent states,  and  have  the  administration  of  all  laws  relating  to  labour 
under  one  general  department  of  the  state  government. 


186  WORKMEN'S  COMPENSATION 

professional,  or  technical  attaches  as  may  be  necessary  in 
order  to  carry  the  duties  of  the  commission  into  execution. 
The  general  duties  of  the  Secretary  were  prescribed  in  the 
law,  and  also  the  general  nature  of  the  rules  which  the  com- 
mission is  authorised  to  make.     The  commission  has  power 
to  subpoena  witnesses  and  to  order  the  production  of  books 
or  papers.     If  a  person  fails,  without  reasonable  cause,  to 
respond  to  the  subpoena  of  the  commission  he  is  guilty  of  a 
misdemeanor,  and  if  he  refuses,  without  reasonable  cause,  to 
be  examined  the  commission  may  apply  to  the  court  for  an 
order  on  such  person  to  show  cause  why  he  should  not  be  com- 
mitted to  jail.     The  commission  is  required  to  prepare  and 
distribute  the  blank  forms  used  in  administration.     The  ex- 
penses of  the  commission  are  at  present  defrayed  from  the 
general  funds  of  the  state,  but  it  is  provided  that  after  July 
1,   1917,   and  annually  thereafter,  those  expenses  shall  be 
apportioned   among  the   different   insurance-carriers   in   the 
state,  including  the  state-fund. 

Notice  of  all  accidents  which  are  covered  by  the  compensa- 
tion law  must  be  given  to  the  commission.  If  the  disability 
extends  beyond  the  waiting  period  the  employer  and  employee 
are  to  agree  regarding  the  pa_>Tnent  of  compensation,  this 
agreement  to  be  made  on  a  form  prescribed  by  the  commis- 
sion, and  the  agi-eement  is  to  be  filed  with  the  commission. 
If  the  agi*eement  is  in  compliance  with  the  law  the  commis- 
sion approves  it  and  this  approval  constitutes  an  award.  If 
the  parties  fail  to  agree  regarding  the  payment  of  compen- 
sation it  is  necessary  for  the  commission  to  settle  the  dispute. 
Any  investigation  or  hearing  which  is  necessary  for  the  de- 
termination of  the  issue  may  be  held  before  any  Commis- 
sioner or  Deputy  Commissioner,  and  the  award,  decision,  or 
order  of  the  Commissioner  or  Deputy  Commissioner  when 


ADMINISTKATION  187 

approved  by  the  commission  is  the  act  of  the  commission. 
The  decision  of  the  commission  is  final  on  qncstions  of  fact, 
but  appeals  may  be  taken  on  questions  of  law  or  the  commis- 
sion may  certify  questions  of  law  to  the  court  for  decision. 

The  provisions  of  the  N'ew  York  law  may  be  regarded  as 
typical  of  the  provisions  which  have  been  made  for  compen- 
sation administration  in  those  states  in  which  a  special  form 
of  administration  has  been  adopted.  Variations  in  detail 
appear  in  the  different  laws,  but  the  principle  running 
through  them  is  the  same,  in  that  it  is  usually  required  that 
accidents  be  reported  to  the  commission,  that  the  agreements 
be  approved  by  them,  that  a  single  commissioner  may  con- 
duct hearings,  and  that  the  decisions  of  the  commission  on 
questions  of  fact  shall  be  final,  appeals  being  allowed  only 
on  questions  of  law.  This  brief  survey  of  the  functions  of 
the  commission  shows  the  superiority  of  administration  in 
this  manner  over  administration  by  the  courts,  for  it  can 
readily  be  seen  that  the  courts  with  all  of  their  other  busi- 
ness  cannot  give  sufficient  attention  to  the  details  which  are 
involved  in  compensation  administration. 

In  a  state  in  which  the  compensation  law  is  of  limited  ap- 
plication the  first  question  wliich  may  reach  the  commission 
in  connection  with  a  compensation  claim  is  as  to  whether  or 
not  the  occupation  in  which  the  injured  was  engaged  at  the 
time  of  the  injury  comes  within  the  coverage  of  the  law. 
Questions  of  this  nature  also  arise  in  states  where  the  laws 
are  of  general  application,  for  all  laws  contain  some  ex- 
ceptions and  the  commission  is  the  first  tribunal  to  determine 
as  to  the  application  of  the  law  in  a  state  in  which  it  is  of 
general  application  as  well  as  in  a  state  where  it  is  of  lim- 
ited application.  The  commission  is,  therefore,  often  con- 
fronted with  the  issue  as  to  whether  or  not  the  accident  is 


188  WOKKMEN'S  COMPENSATION 

covered  by  the  compensation  law,  but  this  issue  is,  from  the 
nature  of  the  case,  raised  more  frequently  under  limited 
laws  than  it  is  under  laws  of  general  application. 

If  it  is  clear  that  the  occupation  is  covered  under  the 
compensation  law  the  next  question  that  may  arise  is  as  to 
the  nature  of  the  occurrence  from  which  the  alleged  injury 
arose  which  constitutes  the  basis  of  the  claim.  The  laws  re- 
late particularly  to  personal  injuries  by  accident  arising  out 
of  and  in  the  course  of  employment.  The  detennination  of 
this  question  may  involve  two  features:  First,  was  the  oc- 
currence from  which  the  injuries  arose  an  "accident"  within 
the  meaning  of  the  compensation  law  ?  Second,  if  it  was  an 
accident  did  this  accident  occur  in  the  course  of  employment 
and  arise  out  of  it  ? 

It  would  be  futile  and  it  would  serve  no  practical  pur- 
pose to  attempt  any  definition  of  the  word  "accident"  as  it 
is  used  in  this  connection.  It  is  sufficient  to  accept  the  or- 
dinary signification  of  the  word  as  relating  to  some  sudden, 
unexpected,  and  violent  occurrence  from  which  injury  re- 
sults. In  the  greater  number  of  claims  which  arise  under 
the  compensation  laws  there  is  no  question  but  what  an  ac- 
cident has  happened,  and  that  the  accident  is  responsible  for 
the  injury,  but  in  some  cases  the  issue  arises  as  to  whether 
or  not  an  accident  has  actually  occurred.  The  most  fre- 
quent instances  of  cases  of  this  nature  are  cases  in  which  the 
disability  appears  to  arise  from  causes  which  are  commonly 
considered  diseases  rather  than  accidents.  While  the  line 
of  demarcation  is  very  clear  in  most  cases,  and  it  is  easy 
to  say  in  some  cases  that  the  disability  was  caused  by  acci- 
dent and  in  others  that  it  was  caused  by  disease,  there  are 
cases  in  which  it  is  difficult  to  determine  whether  the  dis- 
ability is  the  result  of  a  disease  or  of  an  accident,  and  when 


ADMINISTRATION  189 

this  issue  is  raised  it  must  be  determined  by  the  commission. 
The  general  principle  is  that  the  compensation  laws  cover 
disability  caused  by  accidents,  while  they  do  not  cover  dis- 
ability caused  by  disease.^ 

There  may  be  no  question  but  what  an  accident  has  hap- 
pened and  that  disability  has  arisen  from  that  accident,  but 
there  may  be  some  question  as  to  whether  or  not  the  acci- 
dent happened  in  the  course  of  employment  and  arose  out 
of  it  so  as  to  bring  it  within  the  scope  of  the  compensation 
law,  for  the  only  sound  principle  of  compensation  is  that 
it  must  be  shown  that  an  accident  happened  in  the  course 

1  Note  the  observations  regarding  the  relation  of  occupational  dis- 
eases to  compensation  in  Chapter  VII.  Disability  or  death  caused 
by  disease  which  follows  as  an  incident  of  the  injury  is  covered  for 
compensation.  CantweWs  case,  2  Massachusetts  Compensation  Cases, 
246,  where  an  employee  died  from  hypostatic  pneumonia  following 
an  operation  for  a  dislocated  clavicle  sustained  by  accident,  and  it 
was  held  that  his  widow  was  entitled  to  compensation.  Silra's  case, 
ibid.,  597,  where  an  employee  died  from  septicaemia  following  an  injury, 
and  it  was  held  that  his  mother  and  dependent  was  entitled  to  com- 
pensation. A  few  instances  of  cases  where  it  has  been  held  that  no 
accident  was  responsible  for  the  disability,  and  that,  therefore,  no 
compensation  was  payable,  may  be  cited  as  illustrations  of  the  principle, 
and  as  a  matter  of  convenience  these  cases  are  taken  from  the  same 
volume  of  the  Massachusetts  Compensation  Reports.  Twoomey's  case, 
ibid,  540,  where  an  employee  was  kicked  by  a  horse  and  died  within  a 
few  weeks,  but  it  was  shown  that  he  died  from  a  perforated  ulcer  of  the 
stomach  which  had  no  relation  to  his  injury.  Lynch' s  case,  ibid,  591, 
where  an  employee  was  injured  in  May  and  died  in  September  from 
acute  dilatation  of  the  heart,  which  had  no  causal  relation  to  the 
injury.  Schwartz'  case,  ibid,  728,  where  an  employee  was  injured  by 
a  fall  and  later  developed  bronchitis  and  intestinal  tuberculosis,  which 
it  was  shoAvn  was  not  caused  by  the  injury.  If  these  diseases  could  in 
any  way  have  been  traced  to  occupational  hazards  they  would  have 
been  covered  for  compensation  in  Massachusetts,  because  of  the  rule  in 
that  state  which  holds  that  a  disease  arising  from  emplojonent,  inde- 
pendent of  accidental  origin,  is  a  "personal  injury"  within  the  com- 
pensation laAv.  This  ruling  is  based  on  the  wording  of  the  Massachusetts 
law,  and  has  not  been  adopted  in  other  states. 


190  WOEKMEN'S  COMPENSATION 

of  employment  and  arose  out  of  it  before  compensation  can 
be  paid  for  the  disability  which  it  occasioned.  There  may 
in  the  first  place  be  a  question  as  to  whether  an  accident  hap- 
pened in  the  course  of  the  employment  of  the  injured,  and 
even  if  it  is  shown  that  the  accident  so  happened  there  may 
be  a  further  question  as  to  whether  the  accident  arose  out 
of  the  employment  or  not.  When  these  issues  are  raised 
they  are  for  the  commission  to  determine,  and  on  principle 
compensation  must  be  refused  unless  it  is  shown  that  the 
accident  both  happened  in  the  course  of  the  employment  and 
arose  out  of  it.^ 

1  This  principle  that  an  accident  must  both  occur  during  the  course 
of  employment  and  arise  out  of  it  is  well  illustrated  in  the  case  of 
Hopkins  v.  Michigan  ^ugar  Co.,  1  Michigan  Compensation  Cases,  185, 
184  Mich.  87,  150  N.  W.  325.  In  that  case  the  decedent,  who  was  chief 
engineer  for  the  defendant  and  had  supervision  of  the  installation  of 
machinery  in  several  different  plants,  received  an  injury  while  preparing 
to  board  a  street  car  by  slipping  and  falling  on  icy  ground,  and  died  as 
a  result  of  that  injury.  He  was  in  the  employ  of  the  defendant  at 
that  time,  but  it  was  held  that  his  widow  was  not  entitled  to  com- 
pensation because  the  accident  which  caused  his  death  was  not  due  to 
any  of  the  hazards  of  his  employment,  and  so  did  not  arise  out  of  it. 

Questions  often  arise  as  to  whether  accidents  that  happen  to  employees 
going  to  or  from  work  are  covered  for  compensation,  and  the  issue  then 
is  as  to  whether  or  not  such  accidents  occur  during  the  course  of  em- 
ployment and  arise  out  of  it.  The  principle  upon  which  this  issue  is 
determined  is  this :  if  the  employer  furnishes  transportation  as  an 
incident  of  the  employment  these  accidents  come  within  the  coverage  of 
the  law,  but  if  the  employer  does  not  furnish  the  transportation  but 
the  employee  is  at  liberty  to  select  any  method  of  getting  to  or  from 
work  he  is  not  covered  for  compensation  during  that  period.  For  in- 
stance, an  employee  was  engaged  as  a  carpenter  and  it  was  understood 
that  he  would  be  taken  to  and  from  work  in  an  automobile  hired  by 
his  employer.  He  was  injured  while  being  transported  to  the  place  of 
employment  in  this  automobile,  and  it  was  held  that  the  accident  arose 
out  of  and  in  the  course  of  employment.  Gilberfs  case,  1  Massachusetts 
Compensation  Cases,  133.  In  Newton's  case,  3  Massachusetts  Com- 
pensation Cases,  491,  a  foreman  for  the  Commonwealth  engaged  in 
supervising  work  on  the  highways  was  killed  while  riding  home  from 
work  iu  a  team  belonging  to  one  of  the  men  he  had  hired.     Transporta- 


ADMINISTRATION  191 

The  compensation  system  does  not  intend  to  put  a  premium 
on  gi-oss  or  wilful  negligence  or  serious  misconduct  on  the 
part  of  the  injured,  or  on  intentionally  inflicted  injuries, 
so  it  is  usual  to  except  such  coverage  from  the  compensation 
laws.  The  determination  of  the  issues  which  may  arise 
under  this  exception  is  essentially  a  question  of  fact,  so  it 
is  incumbent  on  the  commission  to  pass  upon  such  issues  as 
they  arise.  If  it  is  shown  that  a  given  case  comes  within 
the  exception  no  compensation  is  payable  and  there  is  no  re- 
covery at  common  law,  so  the  injured  must  bear  the  conse- 
quences.^ 

The  actual  parties  in  interest  in  compensation  proceed- 
ings are  usually  the  employee  and  the  insurance  company. 
Under  the  system  of  compensation  insurance  which  has  been 
adopted  in  the  United  States,  as  outlined  in  the  preceding 
chapter,  the  insurer  is  obliged  to  carry  all  of  the  obligations 
of  the  employer  when  it  assumes  his  risk,  and  so  when  claims 
for   compensation    are   made   they    are   referred   to  the   in- 

tion  was  no  part  of  his  contract  of  employment,  so  it  was  held  that 
the  accident  did  not  arise  out  of  the  employment. 

Employees  may  receive  personal  injuries  during  working  hours,  but 
under  such  circumstances  that  the  injuries  cannot  be  considered  as 
having  arisen  out  of  their  employment,  and  so  they  are  not  entitled  to 
compensation  for  the  disability  arising  from  those  injuries.  T\n'o  em- 
ployees were  fooling  and  one  received  injuries.  It  was  held  that  he 
was  not  entitled  to  compensation.  Oeceiviec's  case,  3  Massachusetts 
Compensation  Cases,  183.  Injuries  received  by  reason  of  a  quarrel  with 
a  fellow-employee  are  not  covered  for  compensation.  Oesting's  case, 
ibid,  385. 

1  A  common  instance  of  cases  where  it  has  been  held  that  injuries 
were  caused  by  the  serious  and  wilful  misconduct  of  the  injured  is 
that  where  injuries  have  been  sustained  while  in  a  state  of  intoxication. 
Some  states  specifically  except  injuries  sustained  while  in  such  a  con- 
dition from  the  operation  of  the  act,  but  regardless  of  any  specific 
exception  as  to  intoxication  the  rule  is  that  when  established  it  is  a  bar 
to  compensation  claims.  Kiley's  case,  3  Massachusetts  Compensation 
Cases,  118;   Rochville's  case,  ibid,  153. 


192  WORKMEN'S  COMPENSATION 

surer  by  the  employer  and  the  insurer  is  then  obliged  to 
take  the  place  of  the  employer  in  all  of  the  proceedings  and 
abide  by  any  decision  which  may  be  rendered  at  the  termina- 
tion. In  pursuance  of  its  functions  the  insurance  company 
has  to  receive  all  notices  of  accidents,  investigate  to  ascer- 
tain whether  or  not  they  come  within  the  compensation  law, 
see  that  statutory  medical  aid  is  furnished  as  required,  and 
then  see  that  compensation  is  paid  when  it  is  due  during  the 
continuance  of  the  period  for  which  it  is  payable.  The  in- 
surer as  an  incident  of  insurance  service  assumes  the  per- 
formance of  all  of  these  details  of  the  compensation  obliga- 
tion, and  relieves  the  employer  of  all  of  the  other  duties 
placed  upon  him  by  the  law  in  those  states  in  which  the 
commission  permits  the  assumption  of  those  duties.  This 
means  that  the  insurer  will,  if  permitted  to  do  so,  file  all  of 
the  reports  which  an  employer  is  required  to  file  with  the 
commission  and  act  as  his  representative  in  all  compensation 
matters. 

The  rights  of  the  parties  under  the  compensation  law, 
particularly  those  of  the  injured  employee,  must  be  decided 
with  as  little  delay  as  is  consistent  with  full  opportunities 
for  investigation  and  determination.  It  is  no  particular 
hardship  to  the  employer  or  to  the  insurer  if  the  proceedings 
are  delayed,  but  as  this  element  of  delay  was  one  of  the  de- 
fects of  the  common  law  system  it  must  be  eliminated  as  far 
as  possible  in  the  compensation  system,  and  so  the  laws 
provide  for  a  summary  determination  for  disputed  issues 
under  the  compensation  law.  In  addition  to  being  summary 
the  proceedings  must  also  be  free  from  legal  technicalities, 
particularly  those  relating  to  the  rules  of  evidence,  for  these 
rules  often  made  it  difficult  for  a  plaintiff  to  establish  his 
case  at  common  law  so  those  technicalities  were  removed  by 
the  compensation  system.     This  means  that  in  attempting 


ADMINISTRATION  193 

to  establish  rights  under  the  compensation  law  any  evidence 
which  has  any  bearing  on  the  case  may  be  considered,  re- 
gardless of  the  fact  of  its  admissibility  under  the  rules  of 
the  common  law. 

Unless  the  disability  extends  beyond  the  waiting  period 
specified  in  the  law  no  compensation  is  payable,  but  the  pro- 
vision requiring  the  employer  to  furnish  medical  and  surgi- 
cal treatment  is  applicable  immediately  upon  the  occurrence 
of  an  accident  resulting  in  an  injury.  This  obligation  is 
known  in  compensation  administration  as  "statutory  medi- 
cal aid,"  and  as  noted  in  Chapter  VII  the  provisions  re- 
garding it  vary  in  the  different  laws,  in  that  in  some  the  ob- 
ligation is  limited  as  to  both  time  and  amount,  in  others  as 
to  time,  in  others  as  to  amount,  while  in  some  of  the  laws  the 
obligation  is  unlimited  as  to  both  time  and  amount.  It  is 
the  duty  of  the  commission  to  see  that  this  obligation  is 
properly  administered,  and  any  disputes  which  may  arise 
in  the  course  of  its  administration  must  be  settled  by  the 
commission. 

One  of  the  most  troublesome  of  the  factors  which  arise  in 
the  administration  of  this  provision  is  that  of  the  limita- 
tions placed  on  it  in  those  states  which  have  adopted  the 
principle  of  a  limitation,  for  in  many  cases,  particularly 
those  involving  serious  injuries  or  prolonged  periods  of  dis- 
ability, the  limitations  are  entirely  inadequate  and  incom- 
patible with  the  idea  of  proper  and  suitable  treatment,  and 
the  expense  of  subsequent  treatment  must  be  borne  by  the 
injured,  by  the  employer,  or  by  the  insurer.  In  cases  where 
the  charges  are  in  excess  of  the  amount  provided  in  the 
statute  the  commission  usually  pro  rates  the  statutory  limita- 
tion among  the  different  creditors,  who  lose  the  excess  un- 
less it  is  paid  by  the  injured  or  some  one  in  his  behalf.  This 
is  doubtless  only  a  temporary  situation,  for  as  the  laws  are 


194  WOKKMEN'S  COMPENSATION 

amended  the  limitations  will  probably  be  extended  or  re- 
moved. One  practical  solution  of  the  situation  has  been  the 
attitude  of  the  insurance  companies,  for  in  many  instances 
they  have  assumed  the  cost  of  additional  medical  or  surgical 
aid  in  the  hope  that  the  period  of  disability  might  be  reduced 
by  proper  treatment,  which  otherwise  the  injured  might  not 
have  secured. 

Another  factor  in  the  administration  of  this  provision  is 
that  of  the  authority  given  to  the  commission  in  some  of  the 
states  to  regulate  the  charges  for  these  services.     The  aim  is 
to  keep  this  element  of  expense  as  low  as  is  consistent  with 
first  class  services,  and  to  keep  the  scale  of  fees  for  such 
services  on  the  same  basis  that  it  would  be  if  the  injured 
were  paying  the  charges  himself  rather  than  the  employer 
or  his  insurer.     It  is  recognised  that  there  might  be  a  ten- 
dency on  the  part  of  some  physicians  and  surgeons  to  render 
higher  charges  in  cases  where  it  was  known  that  the  em- 
ployee himself  was  not  obliged  to  pay  than  in  cases  where 
he  was  obliged  to  pay,  and  to  counteract  this  tendency  the 
power  of  regulating  these  charges  is  vested  in  the  commis- 
sion.    The    Connecticut   law   expresses    the    situation   very 
well  when  it  provides  that  the  charges  for  medical,  surgical, 
or  hospital  services  "shall  be  limited  to  such  charges  as  pre- 
vail in  the  same  community  for  similar  treatment  of  injured 
persons  of  a  like  standard  of  living  when  such  treatment  is 
paid  for  by  the  injured  persons,"  and  it  should  be  the  object 
of  the  commissions  generally  to  keep  such  charges  down  to 
this  scale. 

The  fees  of  attorneys  who  may  represent  claimants  in 
compensation  proceedings  are  also  made  the  subject  of  regu- 
lation by  the  commission  in  some  of  the  states.  The  prac- 
tice of  attorneys  of  taking  negligence  cases  on  a  contingent 
fee  basis  was  one  of  the  defects  of  the  common  law  system, 


ADMINISTKATIOIT  195 

for  iu  cases  where  recovery  was  bad  a  large  share  of  the 
recovery  went  to  the  attorney  and  the  plaintiff  received  a 
comparatively  small  amonnt.  It  is  the  intention  of  the 
compensation  system  to  eliminate  the  element  of  legal  ex- 
pense as  much  as  possible,  and  ordinarily  a  claimant  would 
not  need  an  attorney  to  represent  him  in  proceedings  before 
the  commission,  for  those  proceedings  are  free  from  any 
formalities  in  the  way  of  pleadings  or  of  rules  of  evidence, 
so  that  the  claimant  may  present  his  case  to  the  commission 
in  his  own  way  and  the  commission  may  adopt  any  method 
it  chooses  to  ascertain  the  facts.  In  some  cases,  however, 
it  may  be  advisable  that  the  claimant  have  an  attorney  to 
represent  him,  but  in  order  that  the  attorney  may  not  be 
permitted  to  bargain  with  the  claimant  for  a  considera- 
ble share  of  the  recovery  as  is  customary  under  the  common 
law  system,  the  commission  is  given  the  authority  to  regulate 
the  charges  of  attorneys  in  these  proceedings. 

Disputes  may  arise  as  to  the  nature  of  the  disability,  as 
to  whether  it  is  total  or  partial,  and  as  to  whether  or  not 
the  disability  is  at  an  end,  and  when  the  parties  are  unable 
to  come  to  an  agreement  in  such  cases  they  must  be  submitted 
to  the  commission  for  determination.  It  is  important  that 
an  injured  shall  not  be  permitted  to  prolong  his  disability, 
or  malinger,  and  so  in  the  interests  of  the  employer  or  of 
the  insurer  the  commission  must  often  decide  whether  or  not 
disability  has  terminated.  The  determination  of  this  issue 
is  essentially  a  question  of  fact  and  one  in  which  medical 
evidence  is  a  large  factor,  so  this  situation  serves  to  empha- 
sise the  importance  of  the  medical  element  in  compensation. 

Conflicting  interests  may  appear  in  medical  testimony,  for 
it  is  natural  that  in  doubtful  cases  the  physician  who  is  at- 
tending the  injured  will  want  to  have  his  testimony  as  fav- 
ourable as  possible  for  his  patient,  while  if  the  employer 


196  WORKMEN^S  COMPENSATION 

or  insurer  has  any  physician  in  the  case  his  testimony  would 
naturally  favour  his  client.  This  situation  makes  it  impera- 
tive that  in  these  proceedings  physicians  should  be  sum- 
moned into  consultation  who  have  no  bias  or  prejudice  to- 
wards either  side,  and  so  the  testimony  of  the  impartial 
physician  is  a  factor  of  considerable  importance  in  compen- 
sation administration.  The  law  provides,  for  the  protection 
of  the  employer,  that  the  injured  may  be  compelled  to  sub- 
mit himself  to  examination  by  an  impartial  physician  from 
time  to  time,  in  order  that  his  condition  may  be  ascertained, 
and  authority  is  given  to  the  commission  to  secure  such 
medical  assistance  as  may  be  necessary.  Failure  or  refusal 
on  the  part  of  the  injured  to  submit  himself  to  examination 
as  required  by  law  is  usually  penalised  by  a  suspension  of 
compensation  payments  during  the  period  of  such  failure  or 
refusal. 

Injuries  may  occur  which  would  not  of  themselves  result 
in  total  disability  but  which  have  this  eifect  because  of  some 
pre-existing  bodily  defect,  and  the  issue  has  been  raised  as 
to  how  the  disability  resulting  from  injuries  of  this  nature 
should  be  treated  under  compensation.  The  disability  is 
total,  but  should  the  employer  be  called  upon  to  compensate 
for  total  disability  when  the  reason  for  it  is  the  pre-existing 
condition,  which  may  have  been  caused  by  some  previous 
injury,  rather  than  the  injury  received  in  the  course  of  em- 
ployment? The  general  answer  to  this  question  is  that  the 
employer  must  take  the  employee  as  he  finds  him  if  he  allows 
him  to  enter  his  employment,  and  the  result  is  that  the  em- 
ployer is  held  for  the  disability  which  arises  from  the  acci- 
dent regardless  of  the  fact  that  some  pre-existing  defect  may 
have  contributed  to  cause  a  disability  different  from  that 
which  would  have  arisen  if  that  defect  had  not  existed.^ 

1  This  principle  ie  illustrated  by  the  decision  of  the  Supreme  Court 


ADMINISTRATION  197 

The  question  of  dependency  in  fatal  cases  is  one  which  is 
often  submitted  to  the  commission  for  determination.  Cer- 
tain relationships  are  usually  named  in  the  laws  which  when 
shown  constitute  total  dependency  without  any  proof  of  actual 
dependency,  but  in  other  situations  the  issue  of  dependency, 
either  total  or  partial,  is  one  of  fact  and  must  be  determined 
by  the  commission.  Total  dependency  is  usually  presumed 
on  the  part  of  a  wife  who  is  living  with  her  husband  at  the 
time  of  his  death,  or  on  the  part  of  a  husband  who  was 
living  with  his  wife,  and  on  the  part  of  minor  children  below 
a  certain  age,  and  the  compensation  which  these  dependents 
shall  receive  is  specified.  In  other  cases  if  total  dependency 
is  shown  the  dependents  shall  receive  the  same  compensation 
as  those  for  whom  total  dependency  is  presumed ;  if  partial 
dependency  is  shown  the  compensation  has  to  be  determined 
according  to  the  measure  of  the  dependency.  The  determi- 
nation of  the  compensation  in  cases  of  partial  dependency 
must  of  necessity  be  somewhat  arbitrary,   for  the  circum- 

of  Massachusetts  in  Branconnier's  case,  223  Mass.  273,  111  N.  E.  702. 
In  that  case  an  emploj^ee  who  had  lost  one  eye  in  1910  met  with  an 
injury  in  1915  which  destroyed  the  vision  of  the  remaining  eye,  and  the 
Industrial  Accident  Board  awarded  compensation  for  total  disability. 
Appeal  was  taken,  for  it  was  claimed  that  total  disability  could  not  be 
attributed  wholly  to  this  accident  because  of  the  previous  loss  of  one 
eye,  but  this  claim  was  overruled  and  it  was  held  that  the  employee 
was  entitled  to  compensation  for  total  disability,  because  the  employee 
entered  the  employment  with  an  impaired  capacity  and  when  the  ca- 
pacity which  he  possessed  was  gone  he  was  totally  incapacitated  and 
was  entitled  to  the  benefits  provided  in  the  compensation  law  for  such 
eases.  A  different  conclusion  was  reached  by  the  Supreme  Court  of 
Michigan  in  the  case  of  Weaver  v.  Maxwell  Motor  Co.,  186  Mich.  588, 
152  N.  W.  993,  but  the  Michigan  court  reached  its  conclusion  on  the 
language  of  the  Michigan  statute,  and  tlie  Massacliusetts  court  observed 
that  if  that  decision  was  inconsistent  with  their  decision  they  were 
constrained  not  to  follow  it.  On  principle,  it  seems  as  if  the  Massachu- 
setts decision  will  be  accepted  as  the  correct  rule  in  compensation 
administration. 


198  WORKMEN'S  COMPENSATION 

stances  do  not  admit  of  determination  on  any  very  accurate 
or  scientific  basis. 

The  matter  of  commutation  of  the  small  periodical  pay- 
ments into  a  lump  sum  payment  or  several  larger  payments 
is  one  which  is  frequently  submitted  to  the  commission. 
The  element  of  conservation,  which  is  a  large  factor  in  com- 
pensation, demands  that  the  indemnity  be  paid  to  the  in- 
jured or  to  his  dependents  in  small  amounts  and  in  frequent 
payments  so  that  it  can  be  used  as  needed,  and  this  principle 
negatives  the  idea  of  allowing  commutation  of  these  pay- 
ments but  this  is  not  a  rigid  and  inelastic  rule,  so  provisions 
are  made  in  the  laws  by  virtue  of  which  lump  sum  settlements 
are  permitted  when  good  and  sufficient  reasons  can  be  shown 
why  they  should  be  made.  The  theory  on  which  compensa- 
tion is  based  is  averse  to  any  such  practice,  so  it  should  not 
be  allowed  to  become  general  and  all  such  requests  should  be 
thoroughly  investigated  and  declined  unless  the  reasons  why 
they  should  be  granted  are  controlling.  The  provisions  for 
commutation  in  the  laws  are  usually  phrased  in  very  general 
terms  and  vest  large  discretion  in  the  commission  regarding 
such  petitions.  In  some  of  the  states  a  petition  for  a  lump 
sum  settlement  can  be  filed  at  any  time,  while  in  others  the 
periodical  payments  must  have  continued  for  a  certain 
length  of  time  before  a  petition  can  be  filed.  The  issues  in- 
volved are  primarily  and  almost  wholly  issues  of  fact,  so 
there  is  little  or  no  ground  for  appeal  from  the  decision  of 
the  commission.^ 

1  The  provisions  of  the  New  York  law  regarding  lump  sum  settlements 
are  quoted  as  being  typical  of  such  provisions: 

"The  commission,  whenever  it  shall  so  deem  advisable,  may  commute 
such  periodical  payments  to  one  or  more  liunp  sum  payments  to  the 
injured  employee  or,  in  case  of  death,  his  dependents,  provided  the 
same  shall  be  in  the  interest  of  justice."     Section  25. 

The  rule  adopted  by  the  Industrial  Accident  Board  of  Michigan  gives 
a  clear  and  concise  summary  of  the  situation,  and  is  as  follows: 


ADMINISTRATION  199 

It  is  the  object  of  the  method  of  compensation  administra- 
tion which  has  been  adopted  in  this  country,  as  noted  earlier 
in  this  chapter,  to  obviate  in  the  compensation  system  the 
defects  which  were  inherent  in  the  matter  of  enforcing  claims 
under  the  common  law  system  of  employers'  liability,  and  to 
accomplish  this  object  the  method  of  summary  administra- 
tion outlined  in  this  chapter  has  been  substituted  for  the 
procedure  in  the  courts  which  was  necessary  under  the  com- 
mon law  system.  The  essential  difference  between  the  ad- 
ministration of  the  common  law  system  and  this  form  of 
compensation  administration  is  that  which  distinguishes  the 

LUMP  SUM  PAYMENTS. 

"It  is  manifest  that  the  clear  purpose  of  the  legislature  was  to  pro- 
vide that  the  compensation  receivable  imder  this  law  should  go  to  the 
persons  or  families  entitled  to  the  same  in  weekly  payments,  it  being 
the  judgment  of  the  legislature  that  when  so  paid  it  would  more  effec- 
tually meet  and  relieve  the  wants  of  the  injured  employees  and  their 
families,  than  if  paid  in  a  lump  sum.  This  view  has  the  full  endorse- 
ment and  concurrence  of  the  Board.  Therefore  lump  sum  payments  will 
only  be  authorized  in  exceptional  cases  where  circumstances  create  a 
necessity  for  such  action.  Application  for  lump  sum  payments  can 
only  be  made  after  an  'Agreement  in  Eegard  to  Compensation'  has 
been  filed  with  and  approved  by  the  Board,  or  an  award  of  compensa- 
tion made;  and  such  application  is  required  to  be  in  the  form  of  a 
sworn  petition  setting  forth  in  detail  the  facts  and  circumstances  on 
which  the  application  is  based.  Desire  of  the  applicant  to  go  to  an- 
other state  or  country,  or  to  buy  property,  or  to  invest  in  business, 
etc.,  do  not  constitute  reasons  for  lump  sum  payment.  In  general,  con- 
ditions created  by  the  acts  of  the  injured  employee  or  his  dependents 
after  the  accident  do  not  constitute  ground  for  such  payment.  As  a 
general  rule,  the  circumstances  and  conditions  that  will  justify  such 
payment  are  those  existing  prior  to  the  accident  or  created  by  it,  such 
as  mortgage  indebtedness  on  the  home  of  the  employee.  In  such  case 
both  the  indebtedness  and  attendant  conditions  must  be  set  forth  in 
detail,  and  if  secured  by  mortgage,  the  location  and  description  of  the 
property  must  be  given,  the  name  and  address  of  the  mortgagee,  and 
the  office  or  place  where  the  mortgage  is  filed." 

Rule  X,  printed  in  Bulletin  No.  3,  Industrial  Accident  Board  of 
Michigan,  page  51. 

For  a  discussion  of  some  specific  instances  of  requests  for  lump  sum 
settlements,  see  "The  Payment  of  Compensation  by  Lump  Sums,"  2d 
Aimual  Report,  Industrial  Accident  Board  of  Massachusetts,  pages 
146-50. 


200  WORKMEN'S  COMPENSATION 

deliberate  procedure  of  the  courts  from  that  of  a  body  spe- 
cially entrusted  with  the  summary  administration  of  a  par- 
ticular statute,  and  this  observation  holds  good  as  to  those 
states  where  no  commissions  may  have  been  established  for 
the  administration  of  the  compensation  laws,  because  those 
laws  which  provide  no  special  machinery  for  their  admin- 
istration, but  require  the  parties  to  resort  to  the  courts,  usually 
specify  that  the  action  of  the  courts  in  compensation  cases 
shall  be  summary  and  free  from  technicalities.  It  is  only 
by  such  summary  administration,  conducted  in  a  manner 
that  is  fair  to  both  employer  or  insurer  and  to  employee, 
that  compensation  laws  can  fully  accomplish  their  purpose 
in  those  unfortunate  cases  to  which  they  are  applicable. 

EEFERENCES 

Much  of  the  literature  which  relates  to  compensation  adminis- 
tration appears  in  the  form  of  reports  issued  by  the  different 
administrative  bodies,  and  in  the  volumes  of  decisions  in  compen- 
sation cases  which  have  been  issued  in  several  of  the  States.  No 
attempt  is  made  to  enumerate  these  publications  in  this  list,  but 
the  reader  is  referred  to  them  for  specific  information  regarding 
the  administration  of  the  law  of  any  particular  State.  A  few 
general  references  are  given  here,  as  follows :  — 

Compensation  Administration,  F.  B.  Merrels,  Liability  and  Com- 
pensation Lectures,  page  98. 

Administration  of  Compensation  Laws,  0.  E.  Beckwith,  Liability 
and  Compensation  Lectures,  page  102. 

Some  Medical  Features  of  Workmen's  Compensation,  F.  B.  Mer- 
rels, Liability  and  Compensation  Lectures,  page  120. 

Workmen's  Compensation,  Report  Upon  Operation  of  State  Laws, 
Senate  Document  No.  419,  63rd  Congress,  2d  Session. 
(Washington,  1914.) 

Claim  Settlements  Under  Compensation  Laws,  T.  U.  Lyman, 


ADMINISTRATION  201 

The  Golden  Anniversary  Convention,  The  Travelers  Insur- 
ance Company,  page  130. 

Administration  and  Procedure,  Chapter  XV,  Workmen's  Compen- 
sation and  State  Insurance  Law,  H.  B.  Bradbury, 

Operation  of  New  York  Workmen's  Compensation  Law,  John 
Mitchell,  American  Labor  Legislation  Eeview,  Vol.  V,  page 
15. 

Three  Years  Under  the  New  Jersey  Workmen's  Compensation 
Law,  American  Labor  Legislation  Eeview,  Vol.  V,  pages 
38-103. 

Administration  by  Courts  or  by  Commission,  W.  D.  Yaple, 
American  Labor  Legislation  Eeview,  Vol.  V,  page  116. 

Proceedings  of  the  Second  Annual  Session,  National  Association 
of  Industrial  Accident  Boards  and  Commissions,  Seattle, 
1915. 


CHAPTER  X 

SOME    SOCIAX.   ASPECTS    OF    WOKKMEn's    COMPENSATION 

The  subject  of  workmen's  compensation,  except  when  it 
is  considered  in  its  narrower  aspect  of  the  obligation  which 
the  system  imposes  on  the  employer  to  pay  indemnity  to  an 
employee  who  receives  accidental  injuries  in  the  course  of 
his  employment  and  arising  out  of  it,  cannot  be  considered 
as  an  isolated  instance  of  a  certain  form  of  social  progress, 
but  the  movement  must  be  considered  as  a  world  movement 
and  in  its  proper  place  in  the  progi'amme  of  social  reform. 
It  may  as  yet  be  too  early  to  obtain  the  proper  perspective 
with  which  to  view  this  movement,  and  thus  assign  to  it  its 
exact  place,  and  no  attempt  will  be  made  to  do  this  in  this 
chapter,  but  there  are  certain  social  aspects  of  the  matter 
which  demand  consideration  in  any  practical  study  of  the 
subject  and  some  of  the  most  prominent  of  these  practical 
factors  must  be  briefly  considered.  Two  in  particular  are 
selected:  First,  the  element  of  conservation  in  the  way  of 
accident  prevention  which  is  emphasised  by  the  compensation 
system;  and,  second,  the  extension  of  the  principle  of  social 
insurance  which  the  system  suggests. 

The  fact  has  already  been  noted  and  emphasised  that  the 
compensation  system  is  fundamentally  a  repudiation  of  the 
individualistic  theories  upon  which  the  common  law  system 
of  employers'  liability  was  based,  and  upon  which  the  eco- 
nomic doctrines  prevailing  at  the  time  of  the  inception  and 

development  of  this  system  were  also  based.     Viewed  from 

202 


SOME  SOCIAL  ASPECTS  203 

the  cold,  unsentimental  and  uns^Tiipathetic  standpoint  the 
compensation  system  takes  the  element  of  individuality  from 
the  employee  and  places  him  on  practically  the  same  basis 
as  the  other  tools  of  industry.  This  is  a  legal  recognition 
of  the  economic  fact  that  under  the  present  industrial  system 
the  individual  has  become  simply  one  of  the  cogs  in  the  sys- 
tem, but  compensation  distinguishes  between  the  animate  and 
the  inanimate  tools,  for  when  an  inanimate  tool  of  industry 
is  destroyed  or  its  usefulness  is  over  it  is  discarded  and  an- 
other put  in  its  place,  but  when  an  animate  tool  is  broken 
the  compensation  system  says  that  industry  must  bear  a  cer- 
tain share  of  the  financial  loss  which  it  has  caused.  Thus 
industry  is  not  allowed  simply  to  discard  the  human  re- 
sources which  have  been  consumed  in  the  process  because  of 
some  casualities. 

The  compensation  laws  by  their  terms  are  concerned  prin- 
cipally with  provisions  for  the  assumption  and  distribution 
of  this  financial  loss.  The  laws  themselves  do  not  appear 
to  place  any  emphasis  upon  the  element  of  conservation  which 
is  one  of  the  essential  factors  in  the  system.  Attention  has 
been  directed  in  the  previous  chapters  to  some  of  the  differ- 
ent foi-ms  in  which  this  element  of  conservation  manifests 
itself,  but  this  consideration  has  been  directed  principally 
to  the  elimination  of  the  waste  which  was  one  of  the  inci- 
dents of  litigation  under  the  common  law  system,  by  removing 
many  of  the  elements  of  uncertainty  which  made  litigation 
necessary  and  substituting  elements  of  certainty  which  ren- 
dered litigation  unnecessary.  Conservation  in  this  form  re- 
lates to  the  elimination  of  financial  waste;  conservation  in 
another  form  relates  to  the  elimination  of  waste  by  prevent- 
ing the  accidents  and  the  resulting  injuries  for  which  com- 
pensation is  payable,  and  thus  conserving  the  human  re- 
sources upon  which  industry  is  dependent.     It  is  through  this 


204  WOKKMEN'S  COMPENSATIOI^ 

aspect  of  the  element  of  conservation  that  the  compensation 
system  will  reach  its  highest  form  of  social  usefulness. 

This  form  of  conservation  in  the  shape  of  accident  pre- 
vention cannot  be  considered  an  invention  of  compensation, 
for  the  problem  of  accident  prevention  and  the  consequent 
conservation  of  human  resources  had  been  a  pressing  social 
problem  long  before  the  enactment  of  any  compensation  laws 
in  the  United  States^  and  many  different  forces  had  been  ac- 
tively working  to  devise  methods  of  preventing  the  terrible 
slaughter  which  seemed  to  be  an  almost  inevitable  incident 
of  modern  industry,  but  when  the  compensation  system  was 
introduced  and  the  obligation  placed  on  employers  to  com- 
pensate for  all  accidents  of  industry  the  natural  result  was 
that  the  prevention  of  such  accidental  injuries  became  a 
matter  of  paramount  importance,  and  so  this  element  of  con- 
servation must  be  regarded  as  an  important  unofficial  factor 
in  this  system. 

Speaking  in  a  general  way  it  may  be  said  that  the  efforts 
for  conservation  and  accident  prevention  have  been  conducted 
alonsr  two  well  defined  lines,  official  and  unofficial.  Manv 
statutes  have  been  passed  from  time  to  time  which  had  these 
objects  in  view,  and  the  statutes  and  the  methods  adopted 
for  their  administration  and  enforcement  constitute  the  offi- 
cial means.  Many  efforts  have  been  made  by  those  interested 
in  the  problem,  both  from  humanitarian  and  commercial 
standpoints,  to  conserve  the  human  resources  of  those  en- 
gaged in  industry,  and  to  reduce  the  loss  of  life  and  limb 
to  the  lowest  possible  minimum,  and  these  efforts  constitute 
the  unofficial  means. 

The  purpose  of  labour  legislation  is  to  improve  the  con- 
dition of  the  working  classes,  and  so  all  legislation  of  this 
nature  is  based  essentially  on  principles  of  conservation. 
The  mere  prevention  of  accidents  is  only  one  of  the  elements 


SOME  SOCIAL  ASPECTS  205 

of  this  subject  of  conservation,  for  that  deals  with  the  pres- 
ent aspect  of  the  subject  in  that  it  attempts  to  save  the  in- 
dividual himself  from  bodily  injuries  because  of  the  haz- 
ards to  which  his  employment  exposes  him.  In  its  broader 
aspect  this  subject  of  conservation  considers  the  future  as 
well  as  the  present,  for  by  regulating  the  employment  of 
certain  classes,  such  as  women  and  children,  by  regulating 
working  conditions  and  hours  of  labour,  and  by  prescribing 
the  conditions  under  which  hazardous  employments  shall  be 
conducted,  the  attempt  is  made  to  conserve  future  genera- 
tions, for  if  the  energy  of  the  present  generation  is  weakened 
by  unnecessary  industrial  exposure  a  part  of  the  penalty 
will  necessarily  be  imposed  on  the  future.  The  employment 
of  women  and  children  at  work  which  is  beyond  their 
strength  or  for  excessive  working  hours,  and  the  imregulated 
employment  of  men  at  w^ork  which  exposes  them  to  dangers 
of  physical  degeneration,  is  a  positive  harm  to  society,  so  the 
prevention  or  regulation  of  such  emplo>Tnent  is  as  vital  as 
the  prevention  of  injuries  which  result  from  industrial  ac- 
cidents and  is  an  essential  part  of  the  conservation  move- 
ment. 

The  general  classifications  into  which  labour  legislation 
is  divided  have  been  considered  briefly  in  a  previous  chap- 
ter,^ and  mention  is  made  of  these  classifications  in  this  chap- 
ter only  for  the  purpose  of  showing  the  relation  of  the  differ- 
ent classifications  to  the  principle  of  conservation  in  the  com- 
pensation movement.  The  laws  w^hich  relate  to  safety  and 
health  concern  both  the  present  and  the  future  aspects  of  this 
subject  of  conservation,  for  those  regarding  safety  attempt 
to  prevent  industrial  accidents  while  those  regarding  health 
attempt  to  conserve  the  energy  of  the  workman  and  his  pos- 
terity.    The  laws  regulating  the  employment  of  women  and 

1  See  Chapter  IV. 


206  WOKKMEN'S  COMPENSATION 

children  concern  the  future  more  than  the  present,  for  it 
is  the  object  of  such  Laws  to  prohibit  the  employment  of 
those  classes  in  some  operations  and  to  regulate  their  em- 
ployment in  those  operations  in  which  their  employment  is 
legal.  Aside  from  these  laws  women  and  children  when 
legally  employed  are  subject  to  the  general  labour  laws. 
The  laws  regarding  employers'  liability  relate  only  indirectly 
to  this  subject  of  conservation.  Their  application  is  par- 
ticularly to  the  establishment  of  the  liability  of  an  employer 
for  damages  after  an  accident  has  occurred  and  injuiy  has 
resulted. 

The  laws  relating  to  safety  have  a  direct  bearing  upon  the 
compensation  laws^  for  it  is  their  purpose  to  prevent  indus- 
trial accidents  by  requiring  employers  to  eliminate  certain 
definite  conditions  which  may  be  productive  of  accidents. 
By  preventing  accidents  the  burden  of  compensation  is  les- 
sened, and  so  the  system  offers  a  practical  incentive  for  such 
prevention.  The  laws  which  relate  to  the  preservation  of 
the  health  of  employees  do  not  at  present  have  such  a  close 
connection  with  the  compensation  system  as  those  which  re- 
late to  the  safety  of  employees,  for  practically  all  of  the  com- 
pensation laws  are  now  confined  in  their  operation  to  per- 
sonal injuries  which  arise  from  accident  and  do  not  include 
personal  injuries  which  arise  from  disease  that  may  be  con- 
tracted in  the  course  of  employment.  It  is  the  purpose  of 
these  laws  to  protect  employees  as  far  as  possible  from  ex- 
posure to  disease  in  connection  with  their  work,  whether 
such  disease  comes  in  the  category  of  occupational  disease 
or  not,  but  as  long  as  this  exposure  does  not  subject  the  em- 
ployer to  any  liability  under  the  compensation  system  these 
laws  have  no  direct  connection  with  that  system.  If  it  de- 
velops, however,  that  the  compensation  laws  are  extended  to 
cover  occupational  disease,   or  disease  which  may  be  con- 


SOME  SOCIAL  ASPECTS  207 

tracted  in  the  course  of  employment  regardless  of  whether 
or  not  it  is  peculiar  to  any  particular  occupation,  the  interest 
of  compensation  in  this  class  of  laws  will  be  just  as  vital  as 
it  now  is  in  those  laws  which  relate  to  the  safety  of  em- 
ployees. 

Viewed  from  another  standpoint,  however,  it  may  be  con- 
sidered that  the  laws  which  attempt  to  conserve  the  health 
of  employees  have  a  direct  connection  with  the  compensation 
laws.     This  is  the  standpoint  of  practical  compensation  ad- 
ministration.    Although  the  greater  number  of  the  laws  do 
not  as  yet  cover  occupational  disease  or  disease  which  may 
be  contracted  in  the  course  of  employment,  still  if  the  bodily 
powers  of  resistance  of  a  workman  are  so  impaired  by  any 
of  the  occupational  hazards  to  which  he  may  have  been  ex- 
posed that  when   after  an  accidental  injury  has  been  sus- 
tained in  the  course  of  employment  the  disability  is  prolonged 
for  a  period  beyond  which  it  would  have  taken  for  recovery 
had  the  workman  been  in  good  physical  shape,  compensation 
must  be  paid  for  this  additional  period  of  disability.     It  is 
one  of  the  maxims  of  compensation  that,  as  far  as  his  physi- 
cal condition  is  concerned,  an  employer  must  take  an  em- 
ployee as  he  finds  him  and  not  as  he  should  be.     The  result 
of  this  principle  in  practical  operation  is  that  a  minor  in- 
jury to  an  employee  who  is  already  physically  impaired  may 
result   in   prolonged   disability   and   compensation   must   be 
paid  for  the  entire  period,  so  it  is  to  the  interest  of  the  em- 
ployer to  see  that  employees  are  not  exposed  to  any  unneces- 
sary  dangers   of   physical    impairment   in   connection   with 
their  occupation,  and  from  this  standpoint  it  can  readily  be 
seen  that  the  laws  which  relate  to  the  conser\^ation  of  the 
health  of  employees  have  a  direct  bearing  on  the  compensation 
system. 

The  laws  which  regulate  the  employment  of  women  and 


208  WORKMEN'S  COMPENSATION 

children  have  a  direct  connection  with  the  compensation  sys- 
tem, for  while  only  a  few  of  the  laws  make  any  direct  refer- 
ence to  the  fact  that  the  employment  of  some  classes  is 
illegal,  the  inference  which  may  be  drawn  from  all  of  them 
is  that  they  apply  only  to  persons  whose  emplo_)anent  is 
legal.  The  result  is  that  as  to  employees  whose  employment 
is  in  violation  of  law  the  rules  of  the  common  law  apply, 
and  as  illegal  employment  in  effect  constitutes  a  prima  facie 
case  of  negligence  against  the  employer  he  has  little  or  no 
defence  in  cases  where  employees  who  are  employed  in  vio- 
lation of  law  are  injured  in  connection  with  their  employ- 
ment. As  to  women  and  children  whose  emplo^onent  is  in 
accordance  with  the  statutory  regulations  the  compensation 
laws  apply  just  the  same  as  to  other  employees. 

That  classification  in  labour  legislation  which  was  desig- 
nated as  "employers'  liability  laws"  has  been  entirely  super- 
seded in  the  occupations  to  which  the  compensation  laws 
apply.  The  object  of  the  employers'  liability  laws  was  to 
specify  in  a  general  way  the  liability  of  an  employer  for 
injuries  received  by  an  employee  during  the  course  of  his 
employment,  and  as  the  compensation  laws  make  the  em- 
ployer liable  for  all  accidents  to  which  they  apply  they  super- 
sede laws  of  this  class,  so  the  employers'  liability  laws  are 
rendered  obsolete  by  compensation  legislation  as  to  those  oc- 
cupations to  which  the  compensation  laws  are  applicable. 

All  of  these  laws  which  have  had  for  their  object  the  con- 
servation of  workmen  by  seeking  to  prevent  industrial  acci- 
dents and  to  remedy  conditions  which  might  prove  detri- 
mental to  their  health,  and  the  regulation  of  the  employment 
of  women  and  children,  have  been  commendable  in  principle, 
but  it  is  an  unfortunate  circumstance  that  they  are  not  self- 
executory  and  if  not  properly  enforced  their  effect  is  lost. 
Their  intention  is  beneficent,  but  when  a  law  imposes  cer- 


SOME  SOCIAL  ASPECTS  209 

tain  obligations  on  an  employer  and  then  does  nothing  to 
see  that  those  requirements  are  observed  it  is  rendered  nuga- 
tory unless  the  employer  voluntarily  fulfils  the  obligations 
which  are  imposed  on  him.  As  a  general  proposition  these 
laws  have  not  been  enforced  in  the  United  States  with  a  suf- 
ficient degree  of  efficiency  to  give  them  their  full  efi^ect,  so 
they  have  failed  to  accomplish  their  full  purpose.  Their 
enforcement,  except  by  voluntary  action  on  the  part  of  em- 
ployers, requires  a  highly  organised  and  highly  efficient 
system  of  factory  inspection,  and  as  this  system  has  been  de- 
veloped in  but  few  of  the  states  in  this  country  many  of  the 
provisions  of  the  labour  laws  have  been  poorly  enforced  and 
the  official  methods  adopted  to  conserve  the  working  people 
have  to  that  extent  failed  in  their  purpose. 

The  unofficial  efforts  which  have  been  made  to  prevent  in- 
dustrial accidents  and  to  conserve  the  health  of  working  men 
have,  in  a  general  way,  arisen  from  two  motives.  Those 
who  have  had  no  practical  interest  in  the  matter  have  under- 
taken the  solution  of  this  problem  from  humanitarian  mo- 
tives. Many  employers,  who  of  necessity  have  a  vital  in- 
terest in  the  problem,  have  attempted  to  see  that  the  pro- 
visions of  the  law  were  observed  in  their  establishments,  and 
going  further  have  perfected  safeguards  for  situations  to 
which  the  law  did  not  apply  so  that  the  chances  of  accidental 
injuries  to  employees  would  be  reduced  to  a  minimum. 
While  this  action  on  the  part  of  employers  is  based  on  hu- 
manitarian motives,  there  is  another  consideration  which 
prompts  it,  and  this  consideration  is  one  of  enlightened  self- 
ishness, for  by  conserving  the  life^  limb,  and  health  of  em- 
ployees the  employer  will  not  only  secure  more  efficient  serv- 
ice from  them  but  he  will  also  avoid  the  waste  and  liability 
to  financial  loss  that  may  arise  from  industrial  accidents 
or  physical  impaii-ment  on  the  part  of  employees. 


210  WOKKMEN'S  COMPENSATION 

The  spirit  of  any  legislation  is  more  efficiently  carried 
into  execution  by  voluntary  observation  of  its  terais  by  those 
who  are  subject  to  it  than  by  any  elements  of  compulsion  in 
its  enforcement,  and  this  observation  is  particularly  true  in 
its  application  to  the  laws  relating  to  the  safety  and  health 
of  workmen,  for  these  laws  have  been  much  more  effective 
in  those  establishments  where  employers  and  employees  have 
combined  to  see  that  their  provisions  were  enforced  than 
in  establishments  where  compulsion  has  been  necessary.  The 
co-operation  of  employers  and  employees  has  been  a  neces- 
sity, for  even  if  employers  have  done  their  best  to  observe 
the  legal  requirements  their  efforts  might  be  frustrated  by 
employees  who  neglected  or  refused  to  use  the  safeguards 
which  had  been  provided,  or  removed  them  after  they  had 
been  installed. 

The  attempts  to  enforce  the  principles  of  conservation  by 
unofficial  methods  have  been  conducted  along  various  lines, 
but  they  have  had  the  same  end  in  view  and  their  effect  has 
depended,  in  the  last  analysis,  upon  the  co-operation  of  the 
employer  and  the  employee.  Engineers  have  devised  guards 
for  dangerous  machinery,  and  the  manufacturers  of  that  ma- 
chinery have  been  requested  to  equip  it  with  these  guards 
as  it  is  manufactured.  Employers  have  been  urged  to  place 
guards  on  machinery  which  is  already  in  operation  and  on 
which  practical  guards  can  be  placed.  Different  methods 
have  been  devised  to  protect  the  health  of  employees  because 
of  the  occupational  hazards  to  which  they  are  exposed,  and 
employers  have  been  urged  to  see  that  these  methods  are 
adopted  and  observed  by  employees.  Systematic  efforts 
through  organisations  for  safety  work  have  been  made  by 
many  employers,  particularly  large  corporations  employing 
thousands  of  employees,  and  the  effect  of  organisation  of  this 
nature  has  been  most  beneficial,  not  only  to  the  employer  but 


SOME  SOCIAL  ASPECTS  211 

in  its  effect  upon  other  employers  and  upon  the  conservation 
movement  in  general. 

While  large  employers  of  labour  can  perfect  safety  organ- 
isations and  avail  themselves  of  the  services  of  specialists 
along  this  line  it  is  impossible  for  small  employers  to  per- 
fect organisations  of  this  nature  on  the  same  scale,  but  an 
important  unofficial  factor  has  been  of  great  assistance  to 
the  smaller  employers  in  this  matter  and  that  is  the  attitude 
of  the  companies  which  have  been  writing  liability  insurance 
towards  the  problem  of  conservation.  On  the  surface  the 
function  of  liability  insurance  is  to  protect  the  legal  liability 
of  a  policy-holder,  but  the  managers  of  the  liability  com- 
panies have  recognised  the  fact  that  the  institution  had  a 
higher  function  to  perform  and  that  its  social  usefulness 
would  not  consist  as  much  in  compensating  workmen  who 
might  have  been  injured  by  the  negligence  of  the  employer 
as  it  would  in  attempting  to  prevent  the  accidental  injuries 
for  which  damages  might  be  payable,  and  in  view  of  this 
fact  accident  prevention  became  a  recognised  and  established 
function  of  liability  underwriting. 

The  liability  companies,  therefore,  perfected  safety  organi- 
sations composed  of  experts  in  accident  prevention  whose 
duty  it  was  to  visit  plants  on  which  the  company  carried  the 
liability  and  inspect  them  with  a  view  to  suggesting  im- 
provements in  existing  conditions  which  might  reduce  the 
possibility  of  accidental  injuries,  and  this  inspection  service 
came  to  be  regarded  as  an  incident  of  liability  insurance 
protection.  The  liability  inspectors  not  only  assisted  em- 
ployers in  observing  the  provisions  of  the  labour  laws,  but 
they  suggested  improvements  which  did  not  come  within  the 
legal  requirements  that  might  be  of  assistance  in  accident 
prevention  and  general  sanitation.  This  service  was  only 
advisory,  for  the  companies  possessed  no  power  to  compel 


212  WORKMEN'S  COMPEi^SATION 

their  policyholders  to  comply  with  any  recommendations  that 
might  be  made,  but  as  the  policyholders  could  usually  see  the 
reasonableness  of  the  recommendations,  and  as  the  companies 
would  hesitate  to  continue  with  their  insurance  on  plants 
where  their  recommendations  were  disregarded  the  service 
was  effective. 

Another  element  in  liability  insurance  which  became  a 
factor  in  emphasising  the  conservation  function  was  the  sys- 
tem of  schedule  rating  which  was  established  in  connection 
with  liability  risks.  This  system  is  analogous  to  a  somewhat 
similar  system  which  has  been  developed  in  connection  with 
the  rating  of  risks  for  fire  insurance,  making  allowances  for 
certain  features  of  construction  or  protection  which  may 
tend  to  prevent  or  arrest  fires,  and  it  gives  a  policyholder 
credit  on  his  liability  rate  for  the  efforts  which  he  may  make 
to  prevent  industrial  accidents,  thus  making  such  prevention 
a  direct  financial  benefit  to  him. 

Accident  prevention  by  means  of  both  inspection  and 
schedule  rating  has  received  a  great  impetus  under  the  com- 
pensation system,  for  as  conservation  is  such  a  vital  element 
of  the  system  methods  which  tend  towards  the  accomplish- 
ment of  this  principle  must  necessarily  become  important 
factors  in  the  system.  Accident  prevention  as  a  science  is 
almost  in  its  infancy,  and  schedule  rating  for  liability  and 
compensation  risks  has  been  in  operation  for  such  a  short 
time  that  it  is  as  yet  too  early  to  form  any  permanent 
opinion  as  to  its  value,  but  on  principle  it  seems  as  if  its 
effect  will  be  beneficial  and  that  it  will  help  in  the  solution 
of  the  problem  of  accident  prevention. 

This  movement  for  the  prevention  of  accidents  to  em- 
ployees was  doubtless  responsible  to  some  extent  for  the  in- 
ception of  the  movement  to  reduce  all  preventable  accidents, 
for  the  agitation  for  the  prevention  of  such  accidents  has 


SOME  SOCIAL  ASPECTS  213 

received  a  decided  and  noticeable  impetus  during  the  past 
few  years.  The  activities  of  modern  life,  both  industrial 
and  social,  have  been  productive  of  many  accidents,  involving 
immense  economic  loss,  which  arose  independent  of  the  occu- 
pation of  the  injured,  and  as  it  has  appeared  that  a  large 
proportion  of  these  accidents  were  preventable  as  well  as 
many  of  the  industrial  accidents  the  movement  for  the  pre- 
vention of  accidents  in  general  has  followed  as  a  logical  de- 
velopment of  the  agitation  for  the  prevention  of  industrial 
accidents,  and  "safety  first"  has  become  one  of  the  familiar 
slogans  in  all  of  the  activities  of  modern  life.  The  adoption 
of  the  compensation  system  has  doubtless  been  one  of  the 
factors  which  has  helped  in  this  movement,  and  due  credit 
must  be  given  to  the  system  for  this  assistance. 

Before  considering  the  extension  of  the  principle  of  social 
insurance  which  the  compensation  system  suggests,  it  may  be 
well  to  consider  briefly  some  of  the  extensions  in  the  com- 
pensation laws  themselves  which  the  defects  in  the  present 
laws  have  suggested,  for  as  the  laws  were  untried  and  ex- 
perimental in  their  nature  their  practical  operation  has  shown 
many  defects  and  as  a  consequence  demands  have  been  made 
that  the  laws  be  amended  so  as  to  correct  these  defects.  The 
experience  of  the  brief  period  during  which  the  system  has 
been  in  operation  is  that  many  of  the  laws  have  been  amended 
so  as  to  increase  the  benefits  to  employees,  and  it  seems 
probable  that  the  provisions  of  the  different  laws  will  be 
further  liberalised  in  favour  of  employees  as  practical  de- 
fects are  shown  and  emphasised. 

The  laws  which  are  now  limited  in  their  application  should 
be  amended  so  as  to  be  of  general  application.  There  may 
be  certain  employments  which  on  grounds  of  expediency  may 
be  exempted,  but  such  exemptions  should  be  few.  The  ex- 
emption of  domestic  service  is  almost  universal,  and  inas- 


214  WORKMEN'S  COMPENSATION 

much  as  it  is  not  an  employment  -which  is  conducted  for  profit 
there  may  be  some  justification  for  the  exemption.  The  ex- 
ceptions which  exempt  agricultural  service  are  less  defensible, 
for  that  work  is  almost  always  conducted  for  the  profit  of 
the  employer  and  the  occupation  is  one  which  is  classified 
as  "hazardous"  by  the  companies  writing  personal  accident 
insurance,  so  these  employees  need  the  protection  of  the  com- 
pensation laws.  Employment  which  is  merely  casual  and 
at  the  same  time  is  not  in  the  course  of  the  business  of  an 
employer  may  well  be  exempted  from  the  laws,  but  employ- 
ment which  may  be  only  casual  but  which  is  at  the  same  time 
in  connection  with  the  business  of  an  employer  should  be 
included,  for  there  seems  to  be  no  logical  reason  for  this 
exception. 

The  basic  principle  of  compensation  is  that  industry  shall 
bear  its  proportional  share  of  all  of  the  financial  losses  which 
arise  from  industrial  accidents,  and  it  is  inconsistent  with 
this  principle  that  there  should  be  any  general  distinction  in 
occupations,  including  some  under  the  compensation  laws 
and  leaving  others  still  subject  to  the  rules  of  the  common  law. 
The  reason  for  this  distinction  is  that  some  occupations  are 
regarded  as  essentially  hazardous  and  others  regarded  as  non- 
hazardous,  and  the  consideration  which  influenced  the 
adoption  of  the  limited  laws  was  one  of  expediency,  but  this 
distinction  is  based  on  a  wrong  premise  and  the  consider- 
ation of  expediency  can  be  defended  only  on  the  ground  that 
a  limited  compensation  law  is  better  than  none,  for  it  will 
establish  the  principle  and  will  thus  pave  the  way  for  a  re- 
moval of  the  limitations.  The  experience  of  other  countries 
has  been  that  the  limitations  were  eliminated  and  the  com- 
pensation laws  made  of  general  application,  and  it  seems 
reasonable  to  assume  that  this  will  be  the  result  in  those 


SOME  SOCIAL  ASPECTS  215 

states  of  the  United  States  in  whieh  the  compensation  laws 
are  now  limited  in  their  application. 

Efforts  will  doubtless  be  made  to  reduce  the  waiting  period 
in  the  different  laws,  and  in  fact  some  have  already  been  so 
amended.  The  principle  of  the  waiting  period  is  regarded 
as  sound,  in  order  that  compensation  will  not  have  to  be 
paid  for  minor  injuries  involving  only  very  short  periods 
of  disability,  and  as  a  prevention  against  malingering,  so 
it  is  doubtful  if  it  will  be  eliminated,  but  the  probability 
is  that  it  may  be  reduced  so  as  to  bring  the  period  down  to 
one  week  or  less. 

The  tendency  is  to  liberalise  the  provisions  regarding 
statutory  medical  aid.  Practical  experience  has  shown  that 
the  limitations  on  this  feature  of  the  compensation  system 
involve  annoying  administrative  difficulties,  for  when  treat- 
ment which  extends  beyond  the  limits  is  necessary  the  ques- 
tion is  as  to  who  shall  bear  the  expense  if  this  treatment  is 
rendered.  As  a  practical  proposition  the  treatment  is  fre- 
quently furnished  by  the  insurance  company,  particularly 
in  cases  where  it  appears  that  proper  medical  or  surgical 
treatment  will  reduce  the  disability  period  and  thus  reduce 
the  payment  of  compensation.  It  will,  therefore,  be  a  re- 
lief to  insurers  to  see  this  provision  extended,  but  any  ex- 
tension granting  unlimited  treatment  should  be  subject  to 
rigid  supervision  on  the  part  of  the  administrative  authori- 
ties so  that  the  demands  on  the  insurers  would  not  be  ex- 
cessive. 

Some  of  the  laws  have  already  been  amended  so  as  to  in- 
crease the  indemnity  payments,  and  it  is  probable  that  many 
of  the  other  laws  will  be  similarly  amended.  The  tendency 
is  both  to  increase  the  percentage  payable  and  the  total  amount 
to  be  paid  or  the  period   during  which   the   indemnity   is 


216  WORKMEN'S  COMPENSATION 

payable.  Fifty  per  cent  of  wages  seems  inadequate,  so  the 
demand  is  that  the  proportion  be  increased  to  sixty-six  and 
two-thirds  per  cent.  There  is  no  logical  reason  why  in  cases 
of  long  continued  or  permanent  disability  the  payments 
should  not  be  made  during  the  continuance  of  the  disability, 
or  during  the  dependency  in  fatal  cases,  and  so  the  removal 
of  the  time  limitations  may  be  anticipated,  for  this  is  neces- 
sary in  order  to  give  the  system  full  effect. 

Coverage  for  occupational  diseases  is  something  which  may 
reasonably  be  expected  to  be  included  in  the  compensation 
laws,  and  there  is  no  reason  why  such  coverage  should  not 
be  afforded.     This  will  have  to  be  accomplished  by  amend- 
ments to  the  laws  unless  the  courts  reverse  decisions  already 
made,  for  the  greater  number  of  the  courts  of  last  resort 
wliich  have  passed  on  the  issue  have  decided  that  occupational 
diseases  do  not  come  within  the  coverage  of  the  present  laws, 
for  they  seem  to  contemplate  only  personal  injuries  which 
result  from  some  acts  of  violence  and  not  those  which  arise 
from  disease  caused  by  occupational  hazards.     There  is  no 
logical  basis  for  this  distinction,  because  the  danger  of  ex- 
posure to  occupational  disease  is  just  as  great  in  some  forms 
of  modern  industry  as  that  of  exposure  to  industrial  acci- 
dents, the  disability  caused  by  the  one  is  just  as  real  as 
that  caused  by  the   other,   it  arises  from   an  occupational 
exposure,   and  it  is  a  manifest  injustice  when  industry  is 
compelled  to  compensate  the  victim  of  an  industrial  acci- 
dent and  is  not  at  the  same  time  compelled  to  compensate  his 
fellow  employee  who  may  be  suffering  from  an  occupational 
disease.     It  may  be  assumed,  therefore,  that  coverage  for 
occupational  diseases  is  one  of  the  compensation  developments 
of  the  near  future. 

The  compensation  system  by  compelling  the  employer  to 
insure  the  payment  of  the  obligation  which  it  imposed  on  him 


SOME  SOCIAL  ASPECTS  217 

emphasised  the  principle  of  collective  insurance.  It  is  only 
natural,  therefore,  that  as  this  principle  is  emphasised  by 
being  constantly  called  to  the  attention  of  both  employer  and 
employee  the  extension  of  the  principle  is  suggested,  and  con- 
sideration is  given  to  its  application  for  other  insurance  for 
the  benefit  of  employees.  The  accident  insurance  protection 
afforded  by  compensation  insurance  extends  only  to  accidents 
which  happen  during  the  course  of  emplo^ouent  and  arise 
out  of  it,  and  it  only  indemnifies  the  injured  for  a  portion  of 
his  financial  loss.  This  leaves  a  workman  exposed  to  the 
dangers  of  non-occupational  accidents  without  any  insurance 
protection  unless  he  carries  it  voluntarily,  and  only  partially 
protected  for  accidental  injuries  caused  by  the  hazards  of 
industry.  It  can  be  seen,  therefore,  that  the  compensation 
system  immediately  suggests  an  extension  of  the  principle  of 
accident  insurance  for  non-occupational  accidents  and  for  the 
balance  of  the  financial  loss  over  and  above  the  indemnity 
granted  by  the  compensation  laws. 

In  theorv'  each  individual  workman  may  protect  himself 
by  accident  insurance  for  the  hazards  which  the  compensation 
laws  do  not  cover,  but  in  practice  this  is  almost  impossible. 
The  cost  of  such  insurance  is  excessive,  and  its  underwriting 
has  not  been  developed  to  any  great  extent.  The  compensa- 
tion system,  however,  by  requiring  the  insurance  of  em- 
ployees for  occupational  injuries  on  a  collective  rather  than 
on  an  individual  basis  shows  the  way  to  protect  employees 
in  a  similar  manner  for  accidents  which  do  not  happen  in 
connection  with  their  work,  and  also  for  the  excess  of  the 
financial  loss  beyond  that  covered  by  the  indemnity  paid  under 
the  compensation  laws.  Although  this  form  of  group  acci- 
dent insurance  has  not  as  yet  been  developed  to  any  great 
extent  it  is  one  of  the  underwriting  possibilities  which  is 
suggested  by  the  compensation  system,  and  there  seems  to  be 


218  WORKMEN'S  COMPENSATION 

no  reason  why  its  development  should  not  be  anticipated. 

Accident  insurance  for  workingmen  has  been  conducted 
largely  on  the  so-called  "industrial"  plan,  which  because  of 
the  way  in  which  the  premiums  are  collected  makes  the  cost 
of  conducting  the  business  large,  and  this  in  addition  to  the 
hazardous  nature  of  the  employments  in  which  workingmen 
are  usually  engaged  makes  premium  rates  high  for  them  and 
the  cost  of  adequate  protection  practically  prohibitive.  Al- 
though the  compensation  laws  do  not  permit  the  employer  to 
deduct  any  portion  of  the  wages  of  his  employees  to  pay  the 
premium  for  compensation  insurance,  there  is  nothing  to 
prevent  an  employer  from  securing  collective  accident  in- 
surance for  his  employees  for  non-occupational  accidents  and 
making  an  agreement  with  the  employees  to  deduct  the  ex- 
pense of  this  insurance  from  their  wages,  and  thus  eliminate 
many  of  the  elements  of  expense  which  are  incident  to  the 
issuance  of  individual  policies. 

While  this  idea  of  writing  accident  insurance  for  employees 
on  a  collective  basis  for  non-occupational  accidents  has  not 
as  yet  been  developed  to  any  great  extent  as  a  result  of  the 
adoption  of  the  compensation  system,  there  has  been  a  marked 
impetus  to  another  form  of  collective  insurance  by  and 
through  employers  for  the  benefit  of  their  employees,  and  the 
development  of  this  form  of  underwriting  has  been  so  notice- 
ably contemporaneous  with  the  adoption  of  the  compensation 
system  that  it  is  reasonable  to  assume  that  the  principle  of 
collective  insurance  suggested  by  compensation  is  one  of  the 
factors  which  has  assisted  in  its  development.  The  line  re- 
ferred to  is  that  of  life  insurance  on  the  group  plan,  which 
has  become  very  popular  during  the  past  few  years. 

The  group  life  insurance  policy  as  now  written  is  a  con- 
tract made  between  the  insurance  company  and  the  employer 
whereby  each  one  of  the  employees  is  given  a  certain  amount 


SOME  SOCIAL  ASPECTS  219 

of  life  insurance.  This  form  of  life  insurance  has  many 
advantages  over  the  issuance  of  an  individual  policy  to  each 
employee,  and  it  may  be  regarded  as  a  decided  step  in  ad- 
vance in  social  progress.  The  plan  provides  this  insurance 
for  many  who  otherwise  would  not  carry  it,  and  additional 
insurance  for  those  who  are  already  insured  on  their  own 
account.  The  expenses  of  solicitation  and  administration 
are  greatly  reduced  by  insurance  on  the  group  plan,  for  the 
proportion  for  agents'  commission  is  much  lower,  the  expense 
of  medical  examination  is  almost  eliminated  by  substituting 
an  inspection  of  the  group  as  a  whole  for  an  individual  ex- 
amination of  each  applicant,  and  the  expense  of  premium 
collection  is  very  much  reduced  by  dealing  with  one  party, 
the  employer,  rather  than  with  a  large  number  of  individual 
policyholders.  The  form  which  group  life  insurance  has  thus 
far  assumed,  to  a  great  extent,  is  that  of  a  gratuity  on  the 
part  of  the  employers  to  employees,  and  an  incentive  to  faith- 
ful and  continued  service  is  given  by  making  the  insurance 
plan  operative  after  a  certain  number  of  years  in  the  employ 
of  an  employer  and  then  by  increasing  the  amount  of  insur- 
ance for  each  succeeding  year  of  service  up  to  a  certain 
amount.  There  seems  to  be  no  legal  reason,  however,  why 
employees  cannot  have  this  insurance  eifected  through  their 
employers  as  a  matter  of  convenience  and  economy  for  them- 
selves, the  premium  payments  being  deducted  from  their 
wages  by  the  employer  and  transmitted  to  the  insurance  com- 
pany. 

The  extensions  suggested  by  the  compensation  laws  in  the 
United  States  along  the  lines  of  social  insurance  are  as  yet 
more  or  less  speculative  in  their  nature,  but  reasoning  from 
the  analogy  of  the  experience  with  the  compensation  systems 
in  other  countries  and  considering  the  agitation  already  in 
progress  in  this  country  for  the  application  of  certain  prin- 


220  WOKKMEN'S  COMPENSATION^ 

ciples  of  social  insurance,  it  seems  reasonable  to  assume  that 
there  will  be  many  developments  along  these  lines.  By  the 
term  "social  insurance"  is  meant  the  extension  of  the  in- 
surance principle,  accompanied  by  a  certain  degree  of  com- 
pulsion, for  the  protection  of  certain  classes  against  con- 
tingencies against  the  effects  of  which  they  are  unable  to  pro- 
tect themselves,  or  against  which  they  will  not,  in  the  absence 
of  compulsion,  provide  the  necessary  protection.  Applied 
to  the  working  classes  the  principal  forms  of  insurance  of 
this  nature  which  are  suggested  are  accident  insurance,  health 
or  sickness  insurance,  maternity  benefits,  old  age  pensions, 
and  insurance  against  unemployment.  Insurance  against  in- 
dustrial accidents  has  to  a  certain  extent  been  developed  by 
the  compensation  system ;  that  system  cannot  of  itself  estab- 
lish a  s^^stem  of  social  insurance  for  those  other  contingencies, 
but  by  emphasising  the  insurance  principle  it  has  shown  how 
it  might  be  applied  to  them. 

It  is  interesting  to  note  the  experience  of  other  countries, 
particularly  that  of  Germany  and  England,  in  the  establish- 
ment and  development  of  their  social  insurance  systems. 
The  conditions  in  this  country  correspond  more  to  those  in 
England  than  they  do  to  those  in  Germany,  so  as  far  as  there 
may  be  any  similarity  in  the  development  of  the  systems 
it  seems  as  if  our  experience  will  be  more  similar  to  that  in 
England  than  to  that  in  Germany.  The  component  parts 
which  constitute  the  German  social  insurance  system,  sick- 
ness insurance,  accident  insurance,  and  old  age  pensions,  were 
all  adopted  within  a  short  period  of  time  as  parts  of  a  well 
defined  system,  and  this  was  in  pursuance  of  a  definite  pro- 
gramme of  social  reform  undertaken  by  a  strong  imperial  gov- 
ernment. The  different  enactments  which  together  constitute 
the  English  social  insurance  system  were  passed  in  accordance 
with  a  party  programme  in  which  a  very  large  place  was  ac- 


SOME  SOCIAL  ASPECTS  221 

corded  to  legislation  along  social  lines,  and  although  the 
proposed  social  legislation  centred  to  a  certain  extent  around 
the  plans  and  personality  of  Mr.  David  Lloyd  George  it  can 
hardly  he  said  that  he  conceived  the  plan  and  forced  it 
through  in  the  arbitrary  and  autocratic  way  in  which  Bis- 
marck forced  the  German  social  insurance  system  upon  Ger- 
many. 

The  German  system  was  for  a  number  of  years  the  subject 
of  much  hostile  criticism  in  England,  so  the  conversion  of 
England  to  the  principle  of  social  insurance  is  all  the  more 
significant.     While    technically    the    English    compensation 
law  cannot  be  considered  part  of  a  social  insurance  system  be- 
cause of  the  fact  that  the  insurance  of  the  compensation  obli- 
gation is  wholly  optional  with  the  employer,  in  practice  the 
obligation  is  usually  secured  by  insurance  and  so  the  com- 
pensation act  may  be  considered  as  the  cornerstone  on  which 
the  English  system  of  social  insurance  is  based.     In  addition 
to  the  compensation  act,  which  was  made  applicable  to  all 
occupations  in  1906,  the  system  consists  of  an  old  age  pension 
scheme,  adopted  in  1908  and  extended  in  1909,  a  system  of 
sickness  insurance  established  by  the  ISTational  Insurance  Act 
of  1911,  and  an  experimental  scheme  of  insurance  against 
unemplo^Tuent,  limited  in  its  scope  to  the  building  and  en- 
gineering trades,    also   established  by   the   National   Insur- 
ance   Act.     The    old    age    pension    scheme    is    supported 
wholly  by  the  government.     The  sickness  insurance  system 
is  administered  through  the  medium  of  "approved  societies," 
which  must  not  be  conducted  for  profit;  the  system  is  sup- 
ported by  contributions  from  the  employer,  the  employee, 
and  the  state.     The  system  of  unemployment  insurance  in 
those  trades  to  which  it  is  applicable  is  a  direct  state  insur- 
ance plan.     It  is  supported  by  contributions  from  the  em- 
ployer, the  employee,  and  the  state,  but  the  trade  unions  are 


222  WOKKMEN'S  COMPENSATION 

utilised  in  the  administration  of  the  fund,  for  they  are  al- 
lowed to  act  as  agents  of  the  state  in  receiving  dues  and 
paying  the  benefits,  being  reimbursed  for  the  benefits  paid 
from  the  National  Unemployment  Fund. 

The  traditions  in  the  United  States  were  similar  to  those 
in  England  and  antagonistic  to  anything  in  the  way  of  the 
compulsion  which  is  incident  to  the  establishment  of  a  social 
insurance  system  or  any  part  of  it,  so  the  compulsion  to 
insure  under  the  compensation  laws  was  an  innovation  and 
there  was  much  speculation  as  to  the  operation  of  this  feature 
of  the  laws.  Generally  speaking,  it  may  be  said  that  the 
operation  of  the  laws  has  been  more  satisfactory  in  those 
states  where  insurance  has  been  compulsory  and  a  strong 
system  of  administration  has  been  provided  than  it  has  in 
the  states  where  insurance  was  optional  and  the  administra- 
tion of  the  laws  left  with  the  courts.  The  operation  of  these 
features  of  the  laws  has,  therefore,  shown  that  it  may  be 
possible  to  establish  other  elements  of  a  social  insurance  sys- 
tem on  somewhat  the  same  basis,  and  the  logical  outcome  of 
the  establishment  of  the  compensation  system  has  been  an 
agitation  for  the  establishment  of  some  of  these  other  ele- 
ments. 

The  practical  constitutional  situation  regarding  the  estab- 
lishment of  the  other  elements  of  a  social  insurance  system  in 
the  United  States  is  just  the  same  as  it  was  regarding  the 
establishment  of  a  compensation  system,  for  while  the  differ- 
ent social  problems  which  may  demand  the  establishment  of 
such  a  system  are  national  in  their  scope  they  are  local  in 
their  solution,  and  the  legislation  which  would  establish  it 
must  be  by  the  states  rather  than  by  Congress.  This  situ- 
ation may,  therefore,  give  rise  to  a  diversity  of  suggested 
solutions  for  common  problems,  for  each  state  will  doubtless 
consider  the  matter  on  the  basis  of  any  local  variations  that 


SOME  SOCIAL  ASPECTS  223 

may  exist  rather  than  on  the  basis  of  a  uniform  solution  *of 
the  situation,  and  the  result  may  be  a  much  greater  lack 
of  uniformity  than  now  exists  in  the  compensation  legislation 
in  this  country. 

Inasmuch  as  the  aaitation  for  some  of  the  other  forms  of 
social  insurance  aside  from  workmen's  compensation  is  just 
beginning  in  the  United  States^  it  is  as  yet  too  early  to  review 
the  movement  or  to  forecast  its  result.  Its  present  form  is 
an  agitation  on  the  part  of  many  who  are  interested  in  the 
matter  from  a  theoretical  standpoint  for  the  establishment 
of  a  compulsory  health  insurance  system  for  wage  workers, 
and  investigations  by  commissions  in  several  different  states 
regarding  the  general  problem  of  social  insurance  and  the 
feasibility  of  the  establishment  of  any  or  all  of  the  different 
parts  of  a  comprehensive  system.  The  present  status  of  this 
agitation,  in  brief,  is  that  the  necessity  for  the  establishment 
of  such  a  system  is  admitted  by  all  students  of  the  problem, 
but  that  the  solution  of  the  problem  suggested  by  economic 
and  social  theorists  is  questioned  by  those  who  are  interested 
in  the  problem  in  its  practical  aspects. 

The  American  Association  for  Labor  Legislation,  which 
was  organised  during  the  agitation  for  the  establishment  of 
a  compensation  system  and  immediately  became  active  in  that 
propaganda,  has  now  taken  up  the  matter  of  the  establish- 
ment of  a  system  of  compulsory  health  insurance  and  has 
presented  the  most  tangible  plan  that  has  as  yet  been  pre- 
sented for  the  establishment  of  such  a  system.  This  plan 
will  be  outlined  very  briefly  in  this  chapter  without  com- 
ment as  to  its  constitutionality  or  practicability.  It  may 
develop  that  this  suggested  system  is  neither  a  constitutional 
nor  a  practical  solution  of  the  problem,  but  even  if  this  is 
the  result  the  suggestion  may  serve  as  a  working  basis  upon 
which  some  solution  of  the  problem  will  be  reached. 


224  WOEKMEN'S  COMPENSATION 

The  plan  suggested  by  this  association  has  taken  the  form 
of  a  tentative  draft  of  an  act  for  the  establishment  of  a  sys- 
tem of  health  insurance.  This  act  contemplates  that  this 
insurance  shall  be  compulsory  for  wage  workers  earning  less 
than  a  given  annual  amount,  and  voluntary  for  those  persons 
who  for  practical  reasons  are  kept  out  of  the  compulsory 
system.  The  plan  is  to  be  supported  by  joint  contributions 
from  the  employer,  the  employee,  and  the  state.  Health  in- 
surance should  provide  for  a  specific  period  of  disability  only, 
but  a  system  of  invalidity  insurance  should  be  established 
in  the  same  law.  This  insurance  should  be  carried  in  mutual 
funds,  managed  by  employers  and  employees  under  public 
supervision.  Medical  and  hospital  services  should  be  in- 
cluded in  the  system.  The  element  of  conservation  should  be 
recognised,  and  a  campaign  for  health  conservation  inaugu- 
rated similar  to  the  safety  movement  emphasised  by  the  com- 
pensation system. 

Although  this  plan  may  not  be  established  as  proposed,  it 
seems  reasonable  to  assume  that  the  agitation  for  a  system 
of  health  insurance  will  eventually  result  in  the  establish- 
ment of  such  a  system,  and  that  when  a  system  of  health 
insurance  has  been  established  agitation  will  then  commence 
for  the  establishment  of  other  parts  of  a  system  of  social 
insurance.  Reasoning  from  the  analogy  of  the  experience 
of  other  countries  this  seems  to  be  but  a  logical  development, 
and  as  far  as  this  country  is  concerned  the  entering  wedge 
in  this  development  appears  to  have  been  the  establishment 
of  a  system  of  workmen's  compensation. 

EEFERENCES 

Safety,  W.  H.  Tolman. 
Social  Insurance,  H.  E.  Seager. 
Social  Insurance,  I.  M.  Rubinow, 


SOME  SOCIAL  ASPECTS  225 

The  Spread  of  Social  Insurance,  F.  A.  Ogg,  Chapter  XVIII, 

Social  Progress  in  Contemporary  Europe. 
Safety  and  Health,  J.  R.  Commons  and  J.  B,  Andrews,  Chapter 

VII,  Principles  of  Labor  Legislation. 

Group  (Life)  Insurance,  see  the  following  articles  on  the  sub- 
ject of  Group  Insurance  by :  — 
W.  A.  Day,  Association  of  Life  Insurance  Presidents,  Seventh 

Annual  Meeting,  page  11. 
B.  D.  Flynn,  The  Insurance  Institute  of  Hartford,  Volume 

VII,  page  81. 
E.  H.  Blanchard,  Chapter  XXIII,  Life  Insurance,  by  S.  S. 
Huebner. 

Social  Insurance,  J.  R.  Commons  and  J.  B.  Andrews,  Chapter 

VIII,  Principles  of  Labor  Legislation. 
Standards  of  Health  Insurance,  I.  M.  Rubinow. 

See  American  Labor  Legislation  Review,  Vol.  VI,  for  articles, 
discussions,  bibliography,  brief  and  tentative  draft  of  Act 
on  Health  Insurance. 


APPENDIX  A 

THE!    workmen's    COMPENSATION    MOVEMENT    IN 

NEW    YORK 

Througbout  this  book  tbe  workmen's  compensation  prob- 
lem bas  been  treated  as  one  which  is  national  in  its  scope 
and  importance,  although  frank  recognition  has  been  given 
to  the  fact  that  because  of  the  constitutional  situation  in  the 
United  States  tbe  solution  of  the  problem  has  rested  with 
each  individual  state,  as  it  is  a  matter  over  which  Congress 
possesses  very  limited  jurisdiction.  In  view  of  the  fact  that 
the  problem  is  one  of  national  importance  the  progress  of 
the  movement  has  been  traced  in  chronological  order  in  the 
United  States  as  a  whole  rather  than  in  any  of  the  individual 
states,  but  because  of  the  practical  situation  and  the  fact  that 
several  of  the  states  have  distinct  histories  in  this  movement, 
references  were  appended  to  Chapter  VII  giving  in  chrono- 
logical order  the  documentary  landmarks  of  this  movement 
in  several  of  the  states  in  which  the  agitation  has  been  dis- 
tinctive. 

In  recognition  of  this  practical  situation  it  is  believed  that 
it  would  be  well  to  outline  tbe  history  of  the  movement  in 
one  of  the  states  which  has  had  a  distinctive  history,  and 
which  history  may  be  illustrative  of  the  difficulties  that  the 
attempt  to  enact  workmen's  compensation  laws  that  would 
stand  the  test  of  constitutionality  has  encountered,  and  for 
this  purpose  the  state  of  New  York  is  selected.  The  first 
workmen's  compensation  bill  introduced  in  any  state  legisla- 

226 


MOVEMENT  IN  NEW  YORK  227 

ture  in  this  country  was  introduced  in  New  York;  the  first 
exhaustive  investigation  made  regarding  the  enactment  of 
workmen's  compensation  legislation  in  any  state  was  made  in 
New  York ;  the  first  comprehensive  legislation  along  this  line 
to  be  enacted  in  any  state  was  enacted  in  New  York,  one 
part  of  which  was  to  fail  because  it  did  not  stand  the  test  of 
constitutionality,  and  the  other  because  it  was  inoperative  in 
practical  operation;  a  constitutional  amendment  was  passed 
there  which  gave  the  legislature  the  power  to  enact  a  compul- 
sory workmen's  compensation  law,  and  such  a  law  was  enacted 
in  accordance  with  the  authority  thus  granted  by  the  people, 
and  in  other  respects  the  history  of  the  movement  in  New 
York  has  been  both  distinctive  and  typical,  so,  at  the  risk 
of  duplication  of  some  of  the  facts  already  mentioned,  a 
brief  outline  of  that  history  is  given. 

The  bill  introduced  by  Senator  Eord  in  the  New  York 
Senate  in  1898  has  been  referred  to  in  the  text.  This  was 
the  first  workmen's  compensation  bill  to  be  introduced  in 
this  country.  The  bill  had  its  inception  in  an  unofficial 
movement  on  the  part  of  a  number  of  students  of  social 
problems  who  were  ahead  of  their  time,  so  their  efforts  were 
naturally  doomed  to  failure  as  far  as  any  present  results 
were  concerned,  for  their  proposition  was  misunderstood  and 
the  times  were  not  ready  for  the  change  which  the  bill  con- 
templated, but  the  movement  did  result  in  a  modification  of 
the  common  law  rules  to  the  extent  of  the  passage  of  an  Em- 
ployers' Liability  Act,  based  upon  the  British  Act,  a  few 
years  later.  It  was  something  like  ten  years  after  the  intro- 
duction of  Senator  Ford's  bill  before  the  agitation  for  a  sys- 
tem of  workmen's  compensation  in  New  York  became  very 
active,  but  in  the  meantime  the  Department  of  Labor  of  the 
State  had  been  active  in  the  presentation  of  the  problem 
through  its  Bulletin,  and  had  published  considerable  matter 


228  WORKMEN'S  COMPENSATION 

regarding  the  solution  of  the  problem  in  other  countries  and 
the  discussions  in  other  states. 

The  Commission  which  was  appointed  in  New  York  in 
1909,  by  virtue  of  Chapter  518  of  the  Laws  of  1909,  to  in- 
quire into  the  matter  of  the  substitution  of  a  workmen's 
compensation  system  for  the  common  law  system  of  employ- 
ers' liability  did  its  work  in  a  very  thorough  and  exhaustive 
manner.  All  interests  were  represented  on  the  Commission, 
and  all  parties  had  ample  opportunity  to  be  heard  at  the 
different  hearings  which  were  held  by  the  Commission.  The 
proceedings  of  the  Commission  were  watched  all  over  the 
country,  for  the  investigation  came  at  a  time  when  many  were 
awakened  to  the  necessity  of  a  drastic  change  in  or  the 
abolition  of  the  common  law  system  and  it  was  anticipated 
that  the  action  taken  by  New  York  would  prove  the  entering 
wedge  in  the  adoption  of  a  workmen's  compensation  system 
or  some  other  substitute  for  the  existing  system  of  employ- 
ers' liability  in  the  different  states  in  the  United  States. 
The  First  Report  of  this  Commission  was  presented  to  the 
Legislature  of  New  York  under  date  of  March  19,  1910. 
This  report  was  very  comprehensive  in  its  nature,  contain- 
ing the  recommendation  of  the  Commission  as  to  legislation 
which  it  proposed  as  a  substitute  for  the  common  law  system, 
numerous  suggestions  regarding  the  present  status  of  the  situ- 
ation in  this  country,  a  summary  of  the  systems  in  operation 
in  European  countries,  and  a  transcript  of  the  testimony 
taken  by  the  Commission  at  the  different  hearings. 

The  Commission  recommended  legislation  along  two  lines 
and  submitted  drafts  of  two  bills  drawn  in  accordance  with 
its  recommendations,  one  a  compulsory  compensation  act, 
the  other  an  elective  compensation  plan.  Both  of  these  laws 
were  passed  in  1910  substantially  as  recommended  by  the 
Commission.     The  compulsory  act  applied  to  certain  "espe- 


MOVEMENT  m  NEW  YORK  229 

cially  dangerous"  classes  of  employments,  but  the  employ- 
ments named  were  very  limited  as  compared  with  the  occu- 
pations classified  as  "hazardous"  or  ''extra  hazardous"  in 
the  limited  compensation  laws  which  were  subsequently 
passed  in  the  states  that  adopted  the  principle  of  limitation 
in  their  compensation  legislation.  The  practical  argument 
against  the  inception  of  such  legislation  that  the  state  first 
adopting  the  system  would  place  its  employers  at  a  disad- 
vantage in  competition  with  the  employers  of  other  states 
because  of  the  increased  cost  of  the  svstem,  was  in  effect  elimi- 
nated  by  making  the  law  apply  to  emplo^>Tnents  which  were 
non-competitive  in  their  nature  as  far  as  outside  competition 
was  concerned,  for  it  did  not  apply  to  manufacturing  opera- 
tions generally.  The  law  establishing  the  elective  compen- 
sation plan  filled  in  the  gap  left  by  making  the  compulsory 
law  limited  in  its  application,  by  providing  that  employers 
and  employees  might  by  voluntary  agreement  adopt  a  compen- 
sation plan  which  gave  the  same  benefits  as  the  compulsory 
law,  as  a  substitute  for  the  common  law  system.  Both  of 
these  laws  failed  in  their  purpose,  for  the  compulsory  law 
was  soon  declared  unconstitutional,  and  employers  and  em- 
ployees generally  failed  to  avail  themselves  of  the  privilege 
of  election  ofi^ered  by  the  voluntary  compensation  law. 

The  decision  of  the  Court  of  Appeals  of  New  York  in  the 
case  of  Ives  v.  South  Bujfalo  Railway  Company,  201  N.  Y. 
271,  91  N.  E.  431,  holding  that  the  compulsory  compensation 
law  of  New  York  was  unconstitutional,  was  the  most  dramatic 
and  the  most  important  event  in  the  history  of  the  workmen's 
compensation  movement  in  the  United  States.  The  case 
must  be  considered  as  one  of  national  rather  than  of  local 
significance,  for  the  whole  country  was  watching  the  result 
of  the  experiment  in  New  York.  The  law  went  into  effect 
on  September  1,  1910,  and  this  decision  was  rendered  on 


230  WOKKMEN'S  COMPENSATION 

March  24,  1911.  The  case  was  pushed  through  with  all 
possible  haste  so  that  the  status  of  the  law  could  be  determined 
and  announced  with  as  little  delay  as  possible. 

The  incident  which  contributed  the  dramatic  effect  to  the 
decision  in  the  Ives  case  was  the  fire  in  the  shop  of  the  Tri- 
angle Waist  Company,  in  New  York  City.  This  company 
occupied  the  three  upper  floors  of  a  ten  story  fire-proof  loft 
building  in  New  York.  A  fire  broke  out  in  their  shop,  and 
because  of  the  rapidity  of  the  spread  of  the  fire  and  inade- 
quate means  of  escape  nearly  one  hundred  and  fifty  em- 
ployees of  the  company,  mostly  young  women  and  girls,  lost 
their  lives.  A  spectacular  feature  of  the  disaster  was  that 
many  of  those  who  were  killed  leaped  from  the  upper  stories 
of  the  building  to  death  on  the  pavement  below.  This  calam- 
ity happened  just  after  the  decision  of  the  Court  of  Appeals, 
but  within  twenty-four  hours  of  it. 

While  this  disaster  had  but  little  direct  bearing  on  the 
pending  compensation  situation,  for  the  law  which  had  been 
declared  unconstitutional  did  not  apply  to  operations  such 
as  those  of  the  Triangle  Waist  Company,  yet  coming  as  it 
did  at  a  time  when  the  court  had  just  declared  that  the 
legislature  had  no  power  to  compel  the  employer  to  protect 
the  employee  against  the  economic  effects  of  industrial  acci- 
dents the  direct  effect  was  that  the  decision  of  the  court  and 
this  terrible  disaster  stood  out  in  bold  relief  and  emphasised 
very  strongly  the  shortcomings  of  the  existing  laws,  and  the 
laxity  of  the  administration  and  enforcement  of  such  laws 
as  did  exist,  for  in  its  final  analysis  the  cause  of  the  disaster 
could  be  attributed  to  inadequacy  in  the  laws  providing  for 
proper  methods  of  escape  in  case  of  fire  for  persons  employed 
in  such  buildings,  and  to  a  division  of  responsibility  and  con- 
sequent inefficiency  in  the  enforcement  of  such  laws  as  did 
exist.     However,  the  two  events  were  contrasted  in  many  of 


MOVEMENT  IN  NEW  YORK  231 

the  comments  that  were  made  on  the  decision  of  the  court. 

It  is  evident  that  the  Court  of  Appeals  was  not  unmindful 
of  the  economic  and  sociological  considerations  which  were 
urged  in  support  of  the  statute,  for  they  so  stated  in  the 
opinion,  and  they  summarised  the  provisions  of  the  report  of 
the  Commission  regarding  the  necessity  of  the  abolition  of 
the  common  law  system.  It  seems  that  the  members  of  the 
court  would  have  been  glad  to  have  sustained  the  validity  of 
the  law  if  they  could  consistently  have  done  so,  but  they 
came  to  the  conclusion  that  it  was  in  plain  violation  of  cer- 
tain constitutional  giiarantees  and  so  the  only  course  open  to 
them  was  to  declare  it  invalid.  The  gist  of  the  decision  was 
"that  in  its  basic  and  vital  features  the  right  given  to  the 
employee  by  this  statute,  does  not  preserve  to  the  employer 
the  'due  process'  of  law  guaranteed  by  the  Constitution,  for 
it  authorises  the  taking  of  the  employer's  property  without 
his  consent  and  without  his  fault,"  and  so  it  was  held  that  it 
was  unconstitutional. 

It  was  argued  in  support  of  the  law  that  in  view  of  the 
changed  economic  and  social  conditions  since  the  adoption  of 
the  constitutional  guarantees  the  right  given  to  the  employee 
under  the  statute  was  but  a  legitimate  and  justifiable  exten- 
sion of  the  police  power,  but  the  court  denied  this  contention 
after  a  full  examination  of  the  authorities  regarding  the  use 
and  application  of  the  police  power.  The  court  suggested 
that  the  remedy  for  any  such  change  as  that  contemplated 
by  this  statute  lay  with  the  people,  who  possessed  the  power 
of  modification  of  the  fundamental  law,  and  so  the  way  was 
shown  for  a  constitutional  amendment  which  would  give  the 
legislature  power  to  pass  legislation  of  this  nature. 

This  decision  met  with  much  more  criticism  than  approval, 
or  the  critics  of  it  were  much  more  vigorous  in  their  de- 
nunciation than  those  who  approved  of  it  were  in  its  defence. 


232  WORKMEN'S  COMPENSATION 

The  promoters  of  the  legislation  were  naturally  disappointed 
at  the  result,  for  they  had  hoped  that  the  court  would  recog- 
nise the  extension  of  the  police  power  to  this  new  field,  but 
they  gave  the  court  the  credit  of  having  approved  the  prin- 
ciple of  the  legislation  while  at  the  same  time  deciding 
against  its  validity.  The  feeling  against  the  court  for  this 
decision  was  considerable,  and  the  defeat  of  one  of  the  Jus- 
tices when  he  came  up  for  re-election  at  the  expiration  of  his 
term  was  attributed  by  many  to  his  action  in  this  case.  If 
so  this  is  a  lamentable  instance  of  unwarranted  punishment 
for  conscientious  performance  of  judicial  duty,  for  the  court 
was  unanimous  in  its  decision  and  there  was  no  serious  criti- 
cism of  the  motives  of  any  of  its  members  in  reaching  the 
result. 

It  has  already  been  noted  that  the  law  which  provided  for 
the  substitution  of  the  compensation  system  for  the  common 
law  system,  in  those  occupations  to  which  the  compulsory 
law  did  not  apply,  by  voluntary  agreement  between  employer 
and  employee,  proved  inoperative  because  no  such  agTeements 
were  made.  This  result  might  have  been  anticipated  if  the 
experience  in  Massachusetts  under  a  statute  similar  in  prin- 
ciple had  been  investigated,  for  such  a  statute  was  passed  in 
Massachusetts  in  1908  and  was  inoperative  because  no  agree- 
ments were  registered  under  it.  The  practical  defect  in  both- 
of  these  statutes  was  that  there  was  no  element  of  compulsion 
to  cause  either  employer  or  employee  to  elect  their  provisions 
and  no  penalty  for  failure  to  elect.  The  failure  of  the  com- 
pulsory law  in  New  York  because  it  was  declared  unconsti- 
tutional and  the  failure  of  the  voluntary  laws  in  Massa- 
chusetts and  New  York  because  they  were  inoperative,  caused 
the  students  of  the  subject  and  legislators  in  other  states  to 
devise  a  method  by  which  a  law  could  be  drawn  that  would 
in  theory  be  voluntary  but  would  in  effect  be  compulsory, 


MOVEMENT  IN  NEW  YORK  233 

and  thus  the  elective  compensation  law,  which  is  a  distinctive 
feature  of  our  compensation  legislation,  came  into  being. 
This  principle  was  adopted  by  the  legislatures  of  several  of 
the  states  during  the  sessions  of  1911.  These  laws  while 
theoretically  elective  penalise  both  employer  and  employee 
for  failure  to  elect  to  such  an  extent  that  election  in  the  states 
which  have  passed  them  is  practically  universal,  so  they  are 
effective  in  practical  operation,  and  as  their  constitutionality 
has  been  sustained  they  have  obviated  the  constitutional  obsta- 
cles which  seemed  to  prevent  compensation  legislation  in  this 
country. 

The  Commission  was  still  in  existence  when  the  decision 
in  the  Ives  case  was  rendered,  and  the  challenge  of  the  court 
that  only  the  people  possessed  the  power  to  authorise  such 
legislation  as  the  Commission  had  proposed  was  promptly 
accepted.  A  little  more  than  a  month  after  the  decision  was 
announced,  on  May  3,  1911,  the  Commission  filed  a  Fourth 
Report  with  the  Legislature.  This  report  reviewed  the 
action  of  the  court  in  the  Ives  case,  and  suggested  that  there 
were  four  possible  lines  of  action  open  to  the  Legislature,  as 
follows : — 

First:  Drastic  changes  in  the  common  law  rules  which 
would  increase  the  liability  of  the  employer,  but  which  might 
not  diminish  the  evils  of  the  present  system. 

Second:  An  optional  compensation  law  drawn  on  the 
lines  of  the  statute  that  had  just  been  passed  in  New  Jersey, 
but  it  was  felt  that  such  a  law  might  be  unconstitutional,  and 
that  it  might  be  ineffective  in  operation  because  employers 
and  employees  generally  might  fail  to  accept  it. 

Third :  A  compensation  plan  that  would  be  effective  only 
as  to  corporations  organised  since  the  adoption  of  the  Con- 
stitution, as  to  which  the  Legislature  had  the  power  to  re- 
voke their  charters,  but  this  suggestion  offered  only  a  partial 


234  WOEKMEN'S  COMPENSATION 

solution  of  the  problem,  for  it  would  not  apply  to  the  older 
corporations  and  to  partnerships  or  to  individual  employers. 

Fourth :  A  constitutional  amendment  authorising  the 
Legislature  to  pass  a  compensation  law.  The  fourth  sug- 
gestion was  the  one  recommended  to  the  Legislature. 

The  Commission  reported  a  draft  of  a  proposed  consti- 
tutional amendment  to  the  Legislature,  but  when  the  amend- 
ment was  presented  an  element  of  partisan  politics  entered 
into  the  situation.  The  Senate  in  the  meantime  had  become 
Democratic  while  the  Assembly  was  Republican.  The 
amendment  as  recommended  by  the  Commission  was  intro- 
duced  in  the  Senate,  and  another  drawn  along  slightly  dif- 
ferent lines  was  introduced  in  the  Assembly.  The  Demo- 
crats contended  for  the  Senate  amendment  in  order  to  get 
credit  for  it,  and  the  Republicans  contended  for  the  amend- 
ment proposed  in  the  Assembly.  The  contest  was  continued 
until  near  the  end  of  the  session,  when  in  order  to  avoid  a 
failure  of  the  amendment  the  Senate  gave  in  and  the  proposal 
recommended  by  the  Assembly  was  adopted.  It  was  passed 
in  the  same  form  by  the  next  Legislature,  and  submitted  to 
the  people  and  adopted  in  November,  1913.  The  amend- 
ment, in  brief,  empowered  the  Legislature  to  provide  for  the 
establishment  of  a  compensation  system  for  injured  em- 
ployees, regardless  of  whether  such  injuries  were  received  by 
reason  of  the  fault  of  the  employer,  and  to  provide  that  the 
remedy  thus  established  should  be  exclusive. 

Soon  after  this  amendment  was  adopted  the  Governor  of 
New  York  called  a  special  session  of  the  Legislature  to  act 
upon  several  matters  of  pressing  importance,  one  of  which 
was  the  workmen's  compensation  law.  Before  the  Legisla- 
ture met  a  compensation  bill  was  drafted  by  the  Insurance 
Department  and  presented  to  the  Governor,  who  called  a  con- 
ference for  the  consideration  of  the  bill  as  drawn.     It  ap- 


MOVEMENT  IN  NEW  YORK  235 

peared  that  the  bill  was  unsatisfactory  and  defective  in  sev- 
eral essential  particulars,  so  the  matter  of  its  revision  was 
entrusted  to  several  gentlemen  who  had  given  particular  at- 
tention to  the  subject.  When  the  bill  as  redrafted  was  pre- 
sented to  the  Governor  a  conference  of  the  leaders  of  both 
houses,  representatives  of  labour,  and  others  interested  in 
the  matter  was  called,  which  conference  agreed  upon  a  bill 
that  was  to  be  submitted  to  the  Legislature.  It  was  proposed 
that  this  bill  should  be  passed  without  a  public  hearing,  but 
the  demand  for  a  hearing  was  so  strong  that  one  was  held. 
However,  no  changes  of  importance  were  made  in  the  bill, 
and  it  was  passed  and  became  a  law  on  December  16,  1913. 

The  passage  of  this  bill  at  that  time  raised  an  interesting 
constitutional  question,  more  technical  than  practical  in  its 
nature.  The  constitutional  amendment  authorising  the  en- 
actment of  the  law  took  effect  on  January  1,  1914,  but  the 
bill  itself  was  approved  on  December  16,  1913.  The  law 
was  not  made  effective  as  far  as  the  payment  of  compensation 
was  concerned  until  July  1,  1914,  but  some  doubt  arose  as  to 
whether  the  Legislature  had  the  power  to  pass  such  a  law  be- 
fore the  constitutional  amendment  was  actually  effective,  and 
so,  in  order  to  avoid  all  possible  doubts  as  to  the  validity  of 
the  law,  it  was  re-enacted  with  very  little  change  by  the  next 
Legislature  and  became  a  law  on  March  16,  1914. 

The  law  is  compulsory,  and  is  a  limited  compensation  law 
applicable  to  a  large  number  of  specifically  mentioned  "haz- 
ardous employments."  It  may,  therefore,  be  regarded  as 
defective  according  to  the  best  standards  of  compensation 
because  it  is  not  of  general  application,  but  it  may  be  said 
in  its  defence  that  it  applies  to  practically  all  employments 
in  which  there  are  any  appreciable  occupational  hazards. 
It  contains  few  exceptions,  because  limited  laws  by  their 
very  nature  apply  only  to  those  occupations  which  are  ex- 


236  WORKMEN'S  COMPENSATION 

pressly  mentioned  or  can  be  included  by  reasonable  impli- 
cation, so  if  any  occupation  is  not  expressly  or  impliedly 
included  it  is  excluded,  but  it  does  contain  the  usual  excep- 
tions of  farm  labourers  and  domestic  servants.  The  wait- 
ing period  is  two  weeks,  and  the  statutory  medical  aid  is 
for  sixty  days  without  any  limit  as  to  the  amount  which 
shall  be  paid  for  treatment  during  that  period.  This  pro- 
vision is  liberal  as  compared  with  similar  provisions  in  the 
laws  of  some  of  the  other  states,  but  at  the  same  time  it  is 
defective,  for  an  injured  employee  should  be  entitled  to  re- 
ceive such  treatment,  particularly  in  cases  where  it  will  ex- 
pedite recovery  and  reduce  his  disability  period,  as  long  as 
it  is  reasonably  necessary.  In  other  respects  the  law  ranks 
with  the  most  advanced  of  the  compensation  laws.  The  pay- 
ments for  total  disability  are  66%  per  cent,  of  wages  and  last 
for  life.  The  payments  to  dependents  continue  during  de- 
pendency. Insurance  of  the  compensation  obligation  is  re- 
quired, unless  permission  for  self  insurance  is  obtained  on 
proof  of  financial  ability,  and  free  choice  of  the  insurance 
carrier  is  permitted.  A  summary'  system  of  administration 
is  provided. 

It  was  considered  by  many  that  the  law  might  be  uncon- 
stitutional because  the  constitutional  amendment  by  virtue 
of  which  it  was  passed  might  in  itself  be  in  violation  of  the 
Fourteenth  Amendment  of  the  Constitution  of  the  United 
States,  but  the  Supreme  Court  of  the  United  States  has  re- 
cently decided  in  favour  of  the  New  York  amendment.  In 
the  case  of  New  York  Central  Railroad  Co.  v.  White,  in 
which  the  New  York  courts  decided  in  favour  of  the  validity 
of  the  law  and  which  was  carried  to  the  Supreme  Court  of 
the  United  States,  the  court  decided  on  March  6,  1917,  that 
the  prescribed  scheme  of  compulsory  compensation  was  not 
repugnant  to  the  Fourteenth  Amendment,  and  that  the  in- 


MOVEMENT  IN  NEW  YOKK  237 

surance  provisions  of  the  law  were  a  valid  exercise  of  legis- 
lative power,  so  the  law  now  stands  as  valid  by  virtue  of  the 
decision  of  the  highest  court  in  the  land. 

The  law  has  been  amended  several  times  since  its  pas- 
sage, but  these  amendments  have  been  more  in  the  nature 
of  development  than  of  change.  Additions  have  been  made 
to  many  of  the  classifications  of  emplo^Tnents  covered  by 
the  law,  and  a  provision  has  been  inserted  allowing  employ- 
ers and  employees  who  are  not  subject  to  it  to  come  imder 
it  by  joint  election.  All  of  the  payments  to  injured  and 
dependents  were  at  first  made  through  the  State  Workmen's 
Compensation  Commission,  the  insurers  reimbursing  the 
Commission  for  the  pajmients  made  on  account  of  their 
policyholders,  but  that  procedure  has  been  changed  and  the 
insurer  now  makes  direct  payments  to  the  injured  or  to  the 
dependents.  The  State  Workmen's  Compensation  Commis- 
sion, established  by  the  law  to  provide  for  its  administration, 
was  abolished  in  1915  and  the  administration  of  the  law 
was  vested  in  the  State  Industrial  Commission,  with  prac- 
tically no  change  in  the  details  of  administration.  This 
Commission  has  supervision  of  the  administration  of  the 
Department  of  Labor  of  New  York,  and  it  administers  the 
compensation  law  as  a  part  of  its  functions.  It  seems  but 
logical  that  the  compensation  law  should  be  considered  a 
part  of  the  general  labour  laws  of  a  state,  and  that  it  should 
be  administered  in  connection  with  the  other  labour  laws, 
so  the  action  of  New  York  in  this  particular  may  well  be 
taken  as  a  precedent  for  action  by  other  states. 


APPENDIX  B 

STANDARDS    FOR    WORKMEN^S    COMPElNSATION    LAWS 

Mention  was  made  in  Chapter  X  of  the  activity  of  the 
American  Association  for  Labor  Legislation  in  the  propa- 
ganda for  the  enactment  of  workmen's  compensation  legisla- 
tion, and  numerous  references  have  been  made  in  the  differ- 
ent chapters  to  the  publications  of  this  Association.  All  of 
the  publications  cited  have  been  listed  in  the  Bibliography. 
In  the  references  to  Chapter  VII  a  pamphlet  published  by 
the  Association  entitled  "Standards  for  Workmen's  Compen- 
sation Laws"  was  cited.  This  pamphlet  embodies  the 
standards  recognised  for  sound  workmen's  compensation  leg- 
islation at  the  present  time  by  those  who  have  given  much 
study  to  the  subject,  and  by  permission  of  the  American 
Association  for  Labor  Legislation  the  pamphlet  is  reprinted 
here  in  the  Appendix. 

STANDARDS  FOR  WORKMEN'S  COMPENSATION 

LAWS 

Recommended  by  the  American  Association  for  Labor  Legislation 

In  the  opinion  of  the  American  Association  for  Labor  Legisla- 
tion the  following  features  are  essential  to  satisfactory  workmen's 
compensation  laws : 

L  Scale  of  Compensation.  Assuming  machinery  to  insure 
the  prompt  payment  of  the  compensation  required  by  law,  the 
scale  of  payments  is  the  most  important  feature  of  the  system. 
The  strongest  argument  for  compensation  to  all  injured  work- 
men or  to  their  dependents  is  that  shortened  lives  and  maimed 

238 


STANDARDS  239 

limbs  due  to  industrial  injuries  are  just  as  much  expenses  of 
production,  which  should  be  met  by  those  conducting  industry 
for  their  own  profit,  as  are  used-up  raw  materials  or  worn-out 
tools  and  machinery.  The  whole  expense  of  losses  to  capital  is 
necessarily  borne  by  the  employer.  The  whole  expense  of  the 
personal  losses  due  to  injuries  is  the  loss  in  wages  sustained  and 
the  expenses  for  medical  care  during  incapacity.  The  only 
logical  reason  for  not  imposing,  through  the  employers,  this  en- 
tire expense  on  every  industry  that  occasions  it,  is  that  injured 
workers  must  not  be  deprived  of  a  motive  for  returning  to  work 
and  to  independent  self-support  as  soon  as  they  are  able  to  do 
so.  The  compensation  act,  therefore,  should  provide  for  the 
expense  of  medical  attendance  up  to  a  reasonable  amount,  and 
for  the  payment  of  such  a  proportion  of  wages  to  the  victim  of 
the  injury  during  his  incapacity,  or  to  his  dependents  if  he  be 
killed,  as  will  provide  for  the  resulting  needs  and  yet  not  en- 
courage malingering.  The  following  scale  is  believed  to  con- 
form to  these  requirements  and  to  be  the  lowest  that  should  be 
inserted  in  any  compensation  law. 

1.  Medical  Attendance.  The  employer  should  be  required  to 
furnish  necessary'  medical,  surgical  and  hospital  services  and  sup- 
plies for  a  reasonable  period  (to  be  determined  by  the  Accident 
Board).  The  Accident  Board  should  be  empowered  to  establish 
a  schedule  of  physicians'  and  hospital  fees  and  to  control  all  such 
charges. 

All  of  the  acts  except  those  of  Alaska,  Kansas,  New  Hamp- 
shire, Washington  and  Wyoming  provide  for  medical  attend- 
ance. In  California,  Connecticut,  Maryland,  Ohio,  Oregon, 
Porto  Rico  and  West  Virginia,  and  under  the  federal  law  for 
government  employees,  the  period  during  which  such  services 
and  supplies  are  to  be  furnished  is  left  to  the  discretion  of  the 
Accident  Board.  In  California,  Connecticut,  Indiana,  Maine, 
Massachusetts,  Michigan,  Nevada,  New  York,  Oklahoma,  Porto 
Bico,  Rhode  Island,  Texas  and  Wisconsin,  and  under  the  federal 
law,  this  board  controls  the  amount  of  such  service  and  supplies. 
Jn  Maine  and  Pennsylvania  the  amount  payable  may  he  in- 


240  WORKMEN'S  COMPENSATION 

creased  in  the  discretion  of  the  board  in  case  a  major  surgical 
operation  is  required.  In  Indiana,  Kentucky,  Maryland,  New 
York  and  Oklahoma  no  charges  of  physicians  and  hospitals  are 
enforceable  unless  approved  by  it. 

2.  Waiting  Period.  No  compensation  should  be  paid  for  a 
definite  period — to  be  not  less  than  three  nor  more  than  seven 
days — at  the  beginning  of  disability. 

In  Illinois,  Louisiana,  Maryland,  Nevada,  Ohio,  Texas,  West 
Virginia  and  Wisconsin,  and  under  the  federal  law,  the  waiting 
period  is  as  here  recommended.  In  Oregon,  Porto  Rico  and 
Washington  there  is  no  waiting  period. 

3.  Compensation  for  Total  Visahility.  The  disabled  work- 
man should  receive  during  disability  66%  per  cent,  of  wages, 
compensation  not  to  exceed  $20  a  week.  If  he  is  a  minor,  he 
should,  after  reaching  twenty-one  receive  66%  per  cent,  of  the 
wages  of  able-bodied  men  in  the  occupation  group  to  which  he 
belonged.  If  his  wages  are  less  than  $5  a  week,  his  compensa- 
tion should,  be  the  full  amount  of  his  wages. 

All  of  the  acts  except  those  of  Alaska,  Oregon,  Washington 
and  Wyoming  base  the  compensation  on  a  percentage  of  wages, 
rather  than  on  a  flat  rate  regardless  of  the  wages. 

The  percentage  of  wages  here  recommended  is  the  samfe  as  in 
Massachusetts,  New  York  and  Ohio,  and  in  the  federal  law. 
Porto  Rico  provides  75  per  cent,  California,  Kentucky  and  Wis- 
consin provide  65  per  cent,  while  Hawaii  and  Texas  provide  60 
per  cent. 

In  California,  Colorado,  Illinois,  Maryland,  Montana,  New 
York,  Ohio  and  West  Virginia  compensation  for  permanent 
total  disability  is  allowed  for  life,  and  in  Nebraska,  Oregon 
and  Washington,  and  under  the  federal  law,  compensation  for 
total  disability  is  payable  during  the  continuance  of  the  dis- 
ability. 

The  fact  that  the  injured  employee  is  a  minor  is  recognised 
in  fixing  compensation  in  California,  Colorado,  Illinois,  Iowa, 
Maryland,  Massachusetts,  New  York,  Ohio,  Oklahoma  and  Wis- 
consin, and  under  the  federal  law. 


STANDAKDS  241 

4.  Compensation  for  Partial  Disability.  The  workman  who 
is  only  partially  disabled  should  receive  66%  per  cent,  of  the 
difference  between  his  wages  before  the  injury  and  his  wage- 
earning  capacity  after  the  injury,  compensation  not  to  exceed  $20 
a  week,  with  provisions  for  minors,  and  for  workmen  earning  less 
than  $5,  similar  to  those  in  the  case  of  total  disability. 

The  principle  of  basing  compensation  for  partial  disability 
upon  loss  of  earning  power  is  adopted,  with  respect  to  tempo- 
rary partial  disability,  in  all  the  acts  in  this  country  except 
those  of  Alaska,  Iowa,  New  Jersey,  Porto  Rico  and  Wyoming; 
and  is  adopted,  with  respect  to  permanent  partial  disability, 
in  the  acts  of  Arizona,  California,  Colorado,  Kansas,  Massa- 
chusetts, New  Hampshire,  Rhode  Island,  Texas,  Washington, 
West  Virginia  and  the  federal  government. 

5.  Compensation  for  Death. 

(1)  Funeral  Expenses.  The  employer  should  be  required  to 
pay  a  sum  not  exceeding  $100  for  funeral  expenses  in  addition  to 
any  other  compensation. 

In  California,  Connecticut,  Hawaii,  Indiana,  Iowa,  Ken- 
tucky, Louisiana,  Minnesota,  Montana,  Nebraska,  Nevada,  New 
Jersey,  New  York,  Ohio,  Oregon,  Pennsylvania,  Vermont, 
Washington,  West  Virginia  and  Wyoming,  and  under  the 
federal  law,  funeral  expenses  are  paid  in  all  cases  of  death, 
whether  or  not  there  are  dependents.  The  same  is  true  in 
Maryland,  unless  the  decedent's  estate  is  large  enough  to  pay 
such  expense.  The  maximum  limit  is  $200  in  Maine,  Massa- 
chusetts, Michigan  and  Rhode  Island,  while  Alaska,  Illinois 
and  Ohio  allow  $150,  and  Nevada  $125. 

(2)  Compensation  for  Widow.  If  living  with  the  decedent  at 
the  time  of  his  death,  or  if  dependent,  the  widow  should  be 
granted  35  per  cent,  of  his  wages  until  her  death  or  remarriage, 
with  a  lump  sum  on  remarriage  equal  to  two  years'  compensation. 

The  method  of  compensation  for  cases  of  death  recommended 
in  this  and  in  the  succeeding  paragraphs  is  substantially  the 


242  WORKMEN'S  COMPENSATION 

same  as  in  Hawaii,  Louisiana,  Minnesota,  Nevada,  New  York, 
Pennsylvania  and  Vermont,  and  under  the  federal  law.  The 
provision  for  a  lump  sum  payment  to  the  widow  on  remarriage 
is  adopted  in  Minnesota,  Nevada,  New  York,  Oregon,  Wash- 
ington and  West  Virginia. 

(3)  Compensation  for  the  Widower.  If  living  with  the  dece- 
dent at  the  time  of  her  death  and  dependent  upon  her  sup- 
port, the  widower  should  receive  35  per  cent,  of  her  wages,  or  a 
proportionate  amount  if  his  dependency  is  only  partial,  to  be  paid 
until  his  death  or  remarriage. 

(4)  Compensation  for  Widow  or  Widower  and  Children.  In 
addition  to  the  compensation  provided  for  the  widow  and 
widower,  10  per  cent,  should  be  allowed  for  each  child  under 
eighteen  not  to  exceed  a  total  of  66%  per  cent,  for  the  widow  or 
widower  and  children.  Compensation  on  account  of  a  child 
should  cease  when  it  dies,  marries  or  reaches  the  age  of  eighteen. 

(5)  Compensation  to  Children  if  There  Be  No  Widow  or 
Widower.  In  case  children  are  left  without  any  surviving  parent, 
25  per  cent,  should  be  paid  for  one  child  under  eighteen,  and  10 
per  cent,  for  each  additional  such  child,  to  be  divided  among 
such  children  share  and  share  alike,  not  exceeding  a  total  of 
66%  per  cent.  Compensation  on  account  of  any  such  child 
should  cease  when  it  dies,  marries  or  reaches  the  age  of  eighteen. 

(6)  Compensation  to  Parents,  Brothers,  Sisters,  Grandchil- 
dren and  Grandparents  if  Dependent.  For  such  classes  of  de- 
pendents 25  per  cent,  should  be  paid  for  one  wholly  dependent, 
and  5  per  cent,  additional  for  each  additional  person  wholly 
dependent,  divided  among  such  wholly  dependent  persons,  share 
and  share  alike,  and  a  proportionate  amount  (to  be  determined 
by  the  Accident  Board)  if  dependency  is  only  partial,  to  be 
divided  among  the  persons  wholly  or  partially  dependent,  accord- 
ing to  the  degree  of  dependency  as  determined  by  the  Accident 
Board.  These  percentages  should  be  paid  in  cases  where  there 
is  no  widow,  widower,  or  child.  Wliere  there  is  a  widow, 
widower,  or  child,  the  members  of  this  class  should  receive  as 
much  of  these  percentages  as,  when  added  to  the  total  percentage 


STAOT)AKDS  243 

payable  to  the  widow,  widower  or  child,  will  not  exceed  a  total  of 
6673  per  cent.  Compensation  to  members  of  this  class  should  be 
paid  only  during  dependency. 

(7)  Compensation  for  Alien  Non-Resident  Dependents. 
Aliens  should  be  placed  on  the  same  footing  as  other  dependents. 

In  Hawaii,  New  Hampshire  and  New  Jersey  alone  are  alien 
non-resident  dependents  expressly  and  entirely  excluded  from 
compensation.  In  Maryland,  Michigan,  Minnesota,  Nevada, 
West  Virginia  and  Wisconsin  and,  in  part,  in  Colorado,  Con- 
necticut, Kansas,  Kentucky,  Maine,  Montana,  Nebraska,  New 
York,  Oklahoma,  Oregon,  Pennsylvania,  Washington  and 
Wyoming  they  are  expressly  included.  In  the  other  States 
they  are  apparently  included  in  the  absence  of  any  reference 
to  them. 

(8)  Maximum  and  Minimum  Compensation  for  Death.  The 
wages  on  which  death  compensation  is  based  should  be  taken  to 
be  not  more  than  $30  per  week  nor  less  than  $10  per  week ;  but 
the  total  amount  of  the  weekly  compensation  should  not  be  more 
than  the  actual  wages. 

6.  Commutation  of  Periodical  Compensation  Payments.  If 
the  beneficiary  is  or  is  about  to  become  a  non-resident  of  the 
United  States,  or  if  the  monthly  payments  to  the  beneficiary  are 
less  than  $5  a  month,  or  if  the  Accident  Board  determines  that 
it  would  be  to  the  best  interests  of  the  beneficiary,  the  employer 
should  be  permitted  to  discharge  his  liability  for  future  payments 
by  the  immediate  pa}Tnent  of  a  lump  sum  equal  to  the  present 
value  of  all  the  future  payments  computed  at  4  per  cent,  true 
discount,  compounded  annually.  For  this  purpose  the  expectancy 
of  life  should  be  determined  according  to  a  suitable  mortality 
table,  to  be  selected  at  the  discretion  of  the  Accident  Board,  and 
the  probability  of  the  happening  of  any  contingency,  such  as 
marriage  or  the  termination  of  disability,  affecting  the  amount 
or  duration  of  the  compensation,  should  be  disregarded. 

Substantially  similar  provisions  are  found  in  nearly  all  the 
States  and  in  the  federal  law. 


244  WORKMEN'S  COMPENSATION 

II.  Employments  to  Be  Included.  It  is  believed  that  suffi- 
cient progress  has  now  been  made  in  public  education  on  the 
problem,  and  in  the  development  of  efficient  and  economical 
machinery  for  insuring  the  employer  against  his  compensation 
liability,  to  justify  the  inclusion  in  the  system  of  all  employments. 
The  only  exception  which  should  be  made  is  of  casual  employees 
in  the  service  of  employers  who  have  only  such  employees  and 
who,  therefore,  cannot  fairly  be  required  to  carry  compensation 
insurance  policies.  Such  policies,  on  payment  of  a  small  addi- 
tional premium,  are  now  d^a^vn  so  as  to  embrace  casual  as  well 
as  regular  employees.  No  serious  burden  is,  therefore,  entailed 
on  employers,  even  of  domestic  servants,  in  making  them  liable 
to  pay  compensation  e'^en  to  casual  employees. 

The  principle  of  limiting  the  act  to  so-called  ''hazardous 
employments"  is  adopted  only  in  Arizona,  Kansas,  Louisiana, 
Maryland,  Montana,  New  Hampshire,  New  York,  Oklahoma, 
Oregon,  Washington  and  Wyoming,  and,  in  part,  in  Illinois, 
and  in  most  of  these  States  employers  and  employees  in  other 
employments  may  elect  to  come  under  compensation. 

Farm  labour  and  domestic  service  are  excepted  from  the  opera- 
tion of  the  act  in  nearly  all  the  States,  either  expressly  or 
indirectly. 

In  Alaska,  Kansas,  Kentucky,  Nebraska,  Nevada,  Ohio,  Okla- 
homa, Porto  Rico,  Texas  and  Wyoming  the  operation  of  the 
act  is  limited  to  employers  employing  more  than  a  certain 
number  of  employees,  ranging  from  one  to  five;  and  in  Colo- 
rado, Connecticut,  Maine,  Rhode  Island,  Vermont  and  Wis- 
consin employers  of  less  than  a  certain  number  are  not  subjected 
to  the  abrogation  of  the  defences  in  case  they  refuse  to  elect 
compensation.  In  all  the  other  States  there  is  no  distinction 
as  to  the  number  of  employees. 

In  Iowa,  New  Hampshire,  Washington  and  Wyoming,  and 
apparently  in  Maryland,  the  employees  to  be  included  are 
limited  to  persons  engaged  in  the  hazardous  part  of  the  employ- 
ment. In  all  the  other  States  persons  engaged  in  clerical  work 
as  well  as  those  engaged  in  manual  work  are  included. 

Casual  employees  are  included  in  Alaska,  Kansas,  Louisiana, 
Nevada,  New  York  and  Oklahoma,  and  under  the  federal  law. 


III.  Injuries  to  be  Included.  Compensation  should  be  pro- 
vided for  all  personal  injuries  in  the  course  of  employment,  and 
death  resulting  therefrom  within  six  years,  but  no  compensation 
should  be  allowed  where  the  injury  is  occasioned  by  the  wilful 
intention  of  the  employee  to  bring  about  the  injury  or  death  of 
himself  or  of  another.  The  act  should  embrace  occupational 
diseases  which,  when  contracted  in  the  course  of  employment, 
should  be  considered  personal  injuries  for  which  compensation  is 
payable. 

In  all  the  States  except  Montana,  Ohio,  Pennsylvania,  Texas, 
Washington,  West  Virginia  and  Wyoming  the  injury  must 
arise  "out  of"  as  well  as  "in  the  course  of"  the  employment. 

The  principle  of  limiting  the  time  within  which  death  must 
occur  in  order  to  form  a  basis  for  compensation  is  found  in 
Arizona,  California,  Colorado,  Connecticut,  Hawaii,  Kentucky, 
Louisiana,  Maryland,  Nebraska,  Ohio,  Pennsylvania,  Porto 
Eico,  Vermont  and  West  Virginia,  and  in  the  federal  law. 

The  exception  of  injuries  caused  by  the  wilful  intention  of 
the  employee  is  found  in  Alaska,  Colorado,  Hawaii,  Indiana, 
Iowa,  Kansas,  Kentucky,  Louisiana,  Maine,  Maryland,  Minne- 
sota, Nevada,  New  Jersey,  New  York,  Ohio,  Oklahoma,  Oregon, 
Pennsylvania,  Porto  Rico,  Rhode  Island,  Vermont,  Washing- 
ton, West  Virginia  and  Wisconsin,  and  in  the  federal  law. 

Occupational  diseases  are  included  as  personal  injuries  en- 
titling the  employee  to  compensation  in  California  and  Massa- 
chusetts, and  in  the  federal  law. 

IV.  Other  Eemedies  Than  Those  Provided  by  the  Com- 
pensation Act.  One  of  the  weightiest  arguments  against  the 
outworn  system  of  employers'  liability  is  that  it  causes  vast  sums 
to  be  frittered  away  in  law  suits  that  should  be  used  in  caring  for 
the  victims  of  accidents.  To  avoid  this  waste  the  compensation 
provided  by  the  act  should  be  the  exclusive  remedy.  If  the  em- 
ployer has  been  guilty  of  personal  negligence,  even  going  to  the 
point  of  violating  a  safety  statute,  his  punishment  should  be 
through  a  special  action  prosecuted  by  the  State  itself,  not 
through  a  civil  suit  for  damages  carried  on  at  the  expense  and 
risk  of  the  injured  employee. 


246  WORKMEN'S  COMPENSATION 

This  is  the  law  in  Connecticut,  Hawaii,  Illinois,  Iowa,  Kan- 
sas, Louisiana,  Maine,  Massachusetts,  Michigan,  Minnesota, 
Nebraska,  New  Jersey,  New  York,  Rhode  Island,  Wisconsin 
and  Wyoming,  except  that  in  a  few  of  these  States  if  the  em- 
ployer fails  to  insure  the  payment  of  compensation  the  injured 
employee  has  the  option  of  claiming  compensation  or  of  suing 
at  law  with  the  defences  removed. 

V.  Security  for  the  Payment  of  Compensation  Awards. 
The  supreme  tests  of  a  compensation  S3'stem  are,  first,  the  incen- 
tive provided  for  reducing  accidents  to  the  utmost,  and,  second, 
the  promptness  and  certainty  with  which  compensation  claims 
are  met.  The  strongest  incentive  toward  prevention  results  from 
imposing  the  whole  expense  of  compensation  upon  the  employer. 
The  irregularity  and  uncertainty  of  accidents,  however,  makes 
this  policy  inexpedient  for  small  employers  with  limited  financial 
resources.  Security  can  only  be  attained  through  some  system 
of  insurance.  Employers  should,  therefore,  be  required  to  in- 
sure their  compensation  liability. 

Alaska,  Arizona,  California,  Kansas,  Louisiana,  Minnesota, 
Nebraska  and  New  Jersey  are  the  only  States  which  do  not 
require  in  some  form  or  other  the  employer  to  secure  the  pay- 
ment of  compensation  either  by  insurance  or  by  the  giving  of 
a  bond. 

In  accordance  with  the  plans  of  insurance  at  present  provided 
for,  employers  may  either : 

1.  Maintain  their  own  insurance  fund,  subject  to  the  approval 
of  the  Accident  Board ; 

In  Colorado,  Connecticut,  Hawaii,  Illinois,  Indiana,  Iowa, 
Kentucky,  Maine,  Maryland,  Michigan,  Minnesota,  Montana, 
New  Hampshire,  New  York,  Ohio,  Oklahoma,  Pennsylvania, 
Rhode  Island,  Vermont,  West  Virginia  and  Wisconsin  the  em- 
ployer is  permitted  to  carry  his  own  insurance,  if  satisfactory 
to  the  administrative  authority. 

2.  Insure  in  a  Mutual  Association  authorised  to  insure  com- 
pensation liability; 


STANDAKDS  247 

Insurance  in  a  mutual  association  is  permitted  in  most  States, 
Including  California,  Colorado,  Connecticut,  Hawaii,  Illinois, 
Indiana,  Iowa,  Kentucky,  Maine,  Maryland,  Massachusetts, 
Michigan,  Minnesota,  Nebraska,  New  York,  Ohio,  Oklahoma, 
Pennsylvania,  Ehode  Island,  Texas  and  Wisconsin. 

3,  Insure  in  a  State  Insurance  Fund  managed  by  the  Accident 
Board  upon  the  same  principles  and  subject  to  the  same  general 
requirements  as  those  governing  Mutual  Insurance  Associations; 

State  insurance  funds  are  established  in  California,  Colorado, 
Maryland,  Michigan,  Montana,  Ohio,  Oregon,  New  York, 
Nevada,  Pennsylvania,  Porto  Rico,  Washington,  West  Virginia 
and  Wyoming. 

4.  Insure  in  a  private  stock  company,  such  companies  to  be 
subjected  to  the  most  rigid  regulation  as  regards  the  rates  to  be 
charged,  the  agents'  commissions  to  be  paid,  and  the  methods  of 
compensation  to  be  used,  so  that  the  State  may  be  spared  the 
experience  of  some  States  which  have  tried  to  organise  an  efficient 
State  insurance  system  while  subjecting  such  system  to  the  un- 
scrupulous competitive  methods  unfortunately  employed  by  too 
many  agents  of  the  casualty  companies. 

Insurance  in  private  stock  companies  is  allowed  in  every 
State  except  Nevada,  Oregon,  Porto  Rico,  Washington,  West 
Virginia  and  Wyoming. 

VI.  Organisation  op  Accident  Board.  It  is  essential  to 
the  successful  operation  of  the  compensation  system  that  an 
Accident  Board  be  created.  This  board  should  consist  of  three  or 
five  members  appointed  by  the  Governor  with  the  consent  of  the 
Senate.  The  board  should  have  power  to  employ  necessary 
assistants.  Its  members  should  be  required  to  devote  their  entire 
time  to  its  work  and  should  not  be  permitted  to  carry  on  any 
other  business  or  profession  for  profit.  The  entire  cost  of  admin- 
istration of  the  Accident  Board,  including  the  administrative  ex- 
penses of  conducting  the  State  Insurance  Fund  managed  by  the 


248  WORKMEN'S  COMPENSATION 

Accident  Board,  should  be  paid  out  of  an  appropriation  made  by 
the  State. 

Accident  boards  are  provided  in  all  of  the  States  except 
Alaska,  Arizona,  Kansas,  Louisiana,  Minnesota,  Nebraska,  New 
Hampshire,  Rhode  Island  and  Wyoming:. 

VII.  Procedure  for  Settlement  of  Compensation  Claims. 
Provision  should  be  made  for  the  settlement  of  compensation 
claims  either  by  agreement,  subject  to  the  approval  of  the  Acci- 
dent Board,  or  if  no  such  agreement  be  reached,  by  arbitration 
before  a  committee  composed  as  follows :  One  representative  of 
the  employer,  one  representative  of  the  claimant,  one  member  of 
the  Accident  Board  or  an  authorised  deputy.  The  decision  of 
this  committee  should  be  made  conclusive,  unless  the  appeal  there- 
from is  made  to  the  Accident  Board  within  a  specified  time. 
The  Accident  Board's  disposition  of  the  case  on  appeal  from  the 
Arbitration  Committee  should  be  final  and  conclusive  unless  ap- 
peal therefrom  is  taken  within  a  specified  time.  Appeals  from 
decrees  of  the  Accident  Board  should  not  be  allowed,  except  on 
questions  of  law,  and  should  be  carried  direct  to  the  highest  court. 

Agreements  must  be  approved  by  the  Accident  Board  in  Cali- 
fornia, Colorado,  Connecticut,  Hawaii,  Indiana,  Kentucky, 
Maine,  Massachusetts,  Michigan,  New  York,  Oklahoma,  Penn- 
sylvania and  Vermont.  In  Iowa  and  Wisconsin  agreements 
may  be  disapproved  within  a  certain  time.  In  Illinois  an 
agreement  to  waive  the  provisions  of  the  act  as  to  the  amount 
payable  must  be  approved  by  the  board.  In  Minnesota  and 
Rhode  Island  agreements  must  be  approved  by  the  court.  The 
same  is  true  in  New  Jersey  in  the  case  of  minors. 

The  procedure  here  recommended  for  the  settlement  of  com- 
pensation where  no  agreement  is  reached  is  substantially  the 
same  as  in  Hawaii,  Illinois,  Iowa,  Massachusetts,  Michigan 
and  Oklahoma. 

VIII.  Eeports  op  Accidents.  The  bill  should  contain  pro- 
visions similar  to  those  of  the  Standard  Accident  Reporting  Bill 
of  the  American  Association  for  Labor  Legislation,  now  in  use 


STANDARDS  249 

for  about  half  the  industrial  population  of  the  country,  requiring 
full  and  accurate  reports  of  all  industrial  accidents  as  a  basis 
for  computation  of  future  industrial  accident  rates  and  for 
future  safety  regulations  to  decrease  or  prevent  accidents. 

The  essential  features  of  workmen's  compensation  law  here 
outlined  are  urged  on  the  basis  of  a  careful  study  of  the  whole 
question  and  of  the  compensation  legislation  not  only  of  other 
States  but  of  European  countries.  As  one  of  the  functions  of 
the  Association  for  Labor  Legislation  is  to  promote  the  enact- 
ment of  uniform  labour  laws,  it  earnestly  recommends  to  the 
careful  consideration  of  legislators  and  of  those  who  are  inter- 
ested in  social  progress  the  country  over,  the  foregoing  just, 
reasonable  and  progressive  workmen's  compensation  standards. 


APPENDIX  C 

DIGEST    OF    WOEKMEN^S    COMPENSATION    EAWS 

A  brief  digest  of  the  workmen's  compensation  law  of  each 
state  and  of  the  United  States  is  printed  herewith.  This 
digest  is  of  each  law  as  it  stood  at  the  end  of  1916.  The 
digest  is  made  for  the  purpose  of  showing  at  a  glance  the 
kind  of  law  in  force  in  each  state  as  compared  with  the 
standards  recommended  by  the  American  Association  for 
Labor  Legislation.  Only  the  fundamentals  of  the  different 
laws  are  digested,  and  the  digest  is  confined  to  seven  prin- 
cipal headings,  the  nature  of  the  law,  its  application,  the 
waiting  period,  statutory  medical  aid,  indemnity,  the  insur- 
ance requirements,  and  the  administrative  provisions. 

ARIZOIiA 

Nature  of  law.  Compulsory  as  to  employers.  Elective  by 
employees  after  injury. 

Application.  The  law  applies  to  employments  designated 
"especially  dangerous."  Employers  and  employees  in  other  oc- 
cupations may  voluntarily  elect  provisions  of  the  law. 

Waiting  period.  None  if  disability  lasts  longer  than  two 
weeks.     No  payment  for  disability  lasting  less  than  two  weeks. 

Statutory  medical  aid.  None  except  in  fatal  cases  where  no 
dependents  survive,  then  reasonable  medical  and  burial  expenses. 

Indemnity.  Fatal  cases:  Payments  to  dependents  equal  to 
2,400  times  one-half  daily  wages,  not  more  than  $4,000.00. 
Non-fatal  cases :  Total  disability,  50  per  cent,  of  semi-monthly 
earnings,    not    to    exceed    $4,000.00     Partial    disability,    semi- 

250 


DIGEST  251 

monthly  payments  equal  to  one-half  difference  in  earnings  dur- 
ing incapacity,  not  to  exceed  $4,000.00. 

Insurance.     No  provisions. 

Administration.  By  agreement,  by  arbitration,  or  by  submis- 
sion to  the  Attorney-General.  If  these  methods  fail  then  by 
civil  action  at  law, 

CALIFORNIA 

Nature  of  law.     Compulsory. 

Application.  The  law  is  of  general  application,  excepting 
domestic  and  agricultural  labour,  and  casual  employees.  It  is 
elective  as  to  the  excepted  classes. 

Waiting  period.     Two  weeks. 

Statutory  medical  aid.  During  first  90  days,  and  longer  if 
Commission  orders. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases  not  to 
exceed  $100.00.  Total  dependents,  three  times  annual  earnings 
of  deceased,  not  less  than  $1,000.00  nor  more  than  $5,000.00, 
payable  at  least  in  monthly  instalments  equal  to  65  per  cent,  of 
wages.  Partial  dependents,  such  proportion  of  payments  to  total 
dependents  as  corresponds  to  the  ratio  between  earnings  of 
deceased  and  his  contributions  to  their  support.  Non-fatal 
cases :  Permanent  disability,  65  per  cent,  of  average  weekly 
wages  for  240  weeks,  after  that  40  per  cent,  of  weekly  earnings 
is  payable  during  the  remainder  of  life.  Temporary  total  dis- 
ability, 65  per  cent,  of  average  weekly  wages  during  the  dis- 
ability, maximum  240  weeks.  Temporary  partial  disability,  65 
per  cent,  of  loss  of  weekly  wages  during  disability,  maximum 
240  weeks.  "Wages  are  computed  on  the  basis  of  maximum 
annual  earnings  of  $1,666.66  and  minimum  annual  earnings  of 
$333.33. 

Insurance.  Optional  with  private  employers  in  any  manner 
chosen  by  them.  A  state  fund  is  created,  and  municipalities 
are  required  to  insure  in  that  fund  unless  risk  is  refused  by  the 
Fund. 

Administration.    By  an   "Industrial  Accident,  Commission" 


252  WORKMEN'S  COMPENSATION 

consisting  of  three  members.  Hearings  may  be  held  anywhere 
by  the  Commission  or  by  a  Eeferee  appointed  by  the  Commission. 
Appeal  to  the  Court  from  decision  of  the  Commission. 

COLORADO 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  excepting 
domestic  service,  farm  and  ranch  labour,  and  casual  employees. 
It  does  not  apply  to  employers  who  regularly  have  less  than  four 
employees  in  and  about  the  same  place  of  employment.  Em- 
ployers and  employees  who  are  exempt  may  come  under  the  law 
by  voluntary  election. 

Waiting  period.     Three  weeks. 

Statutory  medical  aid.  During  first  30  days,  not  to  exceed 
$100.00.     Special  operating  fee  of  $50.00  in  hernia  cases. 

Indemnitif.  Fatal  cases:  No  dependents;  medical  and 
funeral  expenses  not  to  exceed  $100.00.  Total  dependents,  50 
per  cent,  of  average  weekly  wages,  maximum  $8.00  a  week,  for 
six  years,  minimum  $1,000.00  maximum  $2,500.00.  Partial 
dependents,  the  same  rate  as  for  total  dependents,  to  continue 
during  such  portion  of  six  years  as  Commission  may  determine, 
not  to  exceed  $3,500.00.  Non-fatal  cases :  Total  disability,  50 
per  cent,  of  average  weekly  wages,  minimum  $5.00  maximum 
$8,00  a  week,  during  disability.  Partial  disability,  50  per  cent, 
of  impairment  of  earning  power,  maximum  $8.00  a  week,  up  to 
$2,080.00.  Specific  payments  are  provided  for  specific  dismem- 
berments. 

Insurance.  Eequired  in  stock  or  mutual  company,  or  State 
Fund.     Self  insurance  is  permitted  on  proof  of  financial  ability. 

Administration.  By  an  "Industrial  Commission"  appointed 
by  another  act,  consisting  of  three  members.  Commission  hears 
disputes,  and  hearings  may  be  held  anywhere.  Appeal  to  the 
Court  from  decision  of  Commission. 

CONNECTICUT 

Nature  of  law.     Elective. 

Application.    The  law  is  of  general  application,  excepting 


DIGEST  253 

only  employers  who  have  regularly  less  than  five  employees,  and 
casual  employees  and  outworkers. 

Waiting  period.     Ten  days. 

Statutory  medical  aid.     All  that  is  necessary. 

Indemnity.  Fatal  cases:  Burial  expenses  up  to  $100.00  in 
all  cases.  Total  dependents,  50  per  cent,  of  average  weekly  earn- 
ings of  deceased,  minimum  $5.00  maximum  $10.00  a  week, 
for  not  more  than  318  weeks.  Partial  dependents,  weekly  com- 
pensation, determined  according  to  the  measure  of  dependence, 
not  to  exceed  one-half  of  earnings  of  deceased,  subject  to  same 
limitations  as  in  cases  of  total  dependency.  Non-fatal  cases: 
Total  disability,  50  per  cent,  of  average  weekly  earnings,  mini- 
mum $5.00  maximum  $10.00  a  week,  for  530  weeks.  Partial 
disability,  50  per  cent,  of  loss  in  average  weekly  wages,  maxi- 
mum $10.00  a  week,  up  to  312  weeks.  Specific  payments  are 
provided  for  specific  dismemberments. 

Insurance.  Required  in  stock  or  mutual  companies.  Self  in- 
surance may  be  permitted  on  filing  of  satisfactory  security. 

Administration.  By  Commissioners  appointed  one  for  each 
Congressional  District.  Appeal  to  the  Court  from  decision  of 
Commissioner. 

ILLINOIS 

Nature  of  law.  Elective.  Election  implied  in  certain  enum- 
erated emplo)anents.  Employers  in  other  employments  may 
elect,  but  forfeit  no  defences  by  failure  to  elect. 

Application.  The  law  applies  particularly  to  certain  speci- 
fically enumerated  classes  of  occupations.  Casual  employees  are 
excepted. 

Waiting  period.  Six  days  in  cases  of  temporary  disability. 
None  in  cases  of  total  permanent  disability. 

Statutory  medical  aid.  Not  over  eight  weeks  and  not  to  ex- 
ceed $200.00. 

Indemnity.  Fatal  cases:  No  dependents,  funeral  expenses, 
not  to  exceed  $150.00.  Total  dependents,  a  sum  equal  to  four 
years'  earnings  of  deceased,  paid  in  installments  equal  to  one- 


254  WORKMEN'S  COMPENSATION 

half  average  earnings,  at  same  intervals  as  wages,  minimum 
$1,650.00  maximum  $3,500.00  Partial  dependents,  such  a 
percentage  of  amount  due  to  total  dependents  as  the  support  ren- 
dered by  the  deceased  was  to  his  earnings.  Non-fatal  cases: 
Total  disability,  50  per  cent,  of  earnings,  minimum  $6.00 
maximum  $12.00  a  week,  until  payments  equal  death  benefit, 
then  a  sum  annually  equal  to  8  per  cent,  of  death  benefit,  but  not 
less  than  $10.00  a  month.  Partial  disability,  50  per  cent,  of  loss 
of  earning  capacity,  maximum  $12.00  a  week,  for  not  more  than 
eight  years.  Specific  payments  are  provided  for  specific  dismem- 
berments in  addition  to  other  compensation.  Allowances  are  also 
made  for  disfigurements. 

Insurance.  Employer  electing  to  pay  compensation  must  in- 
sure obligation,  or  furnish  proof  of  financial  ability. 

Administration.  By  an  "Industrial  Board,"  consisting  of 
three  members.  Arbitrator  appointed  by  Board  or  Committee 
of  x\rbitration  hears  disputes.  Hearings  may  be  held  anywhere. 
Decision  of  Arbitrator  or  Committee  decision  of  Board  unless 
appeal  is  taken  to  the  Court. 

INDIANA 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  excepting  only 
farm  and  agricultural  labour,  domestic  servants  and  casual  em- 
ployees. 

Waiting  period.     Fourteen  days. 

Statutory  medical  aid.  During  first  thirty  days,  but  employer 
may  at  his  option  continue  treatment  during  disability. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases  not  to 
exceed  $100.00.  Total  dependents,  55  per  cent,  of  average 
weekly  wages  of  deceased,  minimum  $5.50  maximum  $13.20  a 
week,  for  remainder  of  period  between  death  and  300  weeks  after 
injury.  Partial  dependents,  such  proportion  of  amount  payable 
to  total  dependents  as  amount  contributed  by  deceased  to  their 
support  bore  to  his  annual  earnings.  Non-fatal  cases:  Total 
disability,  55  per  cent,  of  average  weekly  wages,  minimum  $5,50 


DIGEST  255 

maximum  $13.20  a  week  for  500  weeks.  Partial  disability,  50 
per  cent,  of  loss  in  earning  power,  maximum  $12.00  a  week,  not 
to  exceed  300  weeks.  Specific  paj^ments  are  provided  for  specific 
dismemberments. 

Insurance.  Eequired  in  some  company  authorised  to  write 
workmen's  compensation  insurance.  Self  insurance  permitted 
on  proof  of  financial  ability. 

Administration.  By  an  "Industrial  Board,"  consisting  of 
three  members.  Board  holds  hearings,  which  may  be  held  any- 
where.    Appeal  to  the  Court  from  decision  of  Board. 

IOWA 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  excepting 
domestic  servants,  farm  labour,  agricultural  pursuits,  and  casual 
employees. 

Waiting  period.     Two  weeks. 

Statutory  medical  aid.  During  first  two  weeks,  not  to  exceed 
$100.00. 

Indemnity,  Fatal  cases :  Expenses  of  last  sickness  and  burial 
expenses  in  all  cases,  not  to  exceed  $100.00.  Total  dependents, 
50  per  cent,  of  average  weekly  wages  of  deceased,  minimum 
$5.00  maximum  $10.00  a  week,  for  300  weeks.  Partial  depen- 
dents, such  proportion  of  amount  payable  to  total  dependents  as 
amount  contributed  to  their  support  by  deceased  bore  to  his 
annual  earnings.  Non-fatal  cases :  Total  disability,  50  per  cent, 
of  average  weekly  wages,  minimum  $5.00  maximum  $10.00  a 
week,  for  400  weeks.  Partial  disability,  same  as  for  total  dis- 
ability, up  to  300  weeks.  Specific  pa}Tnents  are  provided  for 
specific  dismemberments. 

Insurance.  Required  in  some  approved  corporation,  associa- 
tion, or  organisation.  Self  insurance  permitted  on  proof  of 
financial  ability. 

Administration.  By  agreement  subject  to  approval  of  Indus- 
trial Commissioner,  or  by  arbitration  with  review  by  the  Indus- 


256  WORKMEN'S  COMPENSATION 

trial  Commissioner.     Appeal  may  be  taken  to  the  Court  from 
the  decision  of  the  Industrial  Commissioner. 

KANSAS 

Nature  of  law.     Elective. 

Application.  The  law  applies  to  employments  "determined  to 
be  especially  hazardous."  Not  applicable  unless  five  or  more 
employees  are  employed  continuously,  except  in  mines.  Em- 
ployers of  less  than  five  workmen  may  elect  to  come  within  the 
Act. 

Waiting  period.  The  Act  does  not  apply  to  injuries  disabling 
for  less  than  two  weeks.  If  disability  lasts  over  two  weeks,  com- 
pensation begins  from  date  of  accident. 

Statutorij  medical  aid.  No  provisions,  except  in  fatal  cases 
where  no  dependents  survive,  then  $100.00  for  medical  atten- 
dance and  burial. 

Indemnity.  Fatal  cases:  No  dependents,  medical  and  fu- 
neral expenses,  not  to  exceed  $100.00.  Total  dependents,  three 
times  earnings  for  previous  year,  minimum  $1,200.00  maxi- 
mum $3,600.00.  Partial  dependents,  such  proportion  of  pay- 
ments to  total  dependents  as  may  be  agreed  upon.  Non-fatal 
cases:  Total  disability,  50  per  cent,  of  average  weekly  wages, 
minimum  $6.00  maximum  $15.00  a  week,  up  to  eight  years. 
Partial  disability,  payments  not  less  than  25  per  cent,  nor  more 
than  50  per  cent,  of  average  weekly  wages,  minimum  $3.00 
maximum  $12.00  a  week,  not  to  exceed  eight  years. 

Insurance.     Not  required. 

Administration.  By  agreement  or  by  arbitration,  subject  to 
appeal  to  the  Court. 

KENTUCKY 

Nature  of  law.  Elective.  Election  is  express  as  to  both  em- 
ployer and  employee. 

Application.  The  law  is  of  general  application,  excepting 
domestic  service,  agriculture,  and  common  carriers  which  come 
under  the  laws  of  the  United  States. 


DIGEST  257 

Waiting  period.     Two  weeks. 

Statutory  medical  aid.  Ninety  days,  unless  Board  within  that 
time  otherwise  directs,  not  to  exceed  $100.00.  $200.00  in  hernia 
cases  if  operation  is  performed. 

Indemnity.  Fatal  cases :  Burial  expenses  in  all  cases  not  to 
exceed  $75.00.  No  dependents,  $100.00  to  personal  representa- 
tives. Total  dependents,  65  per  cent,  of  average  weekly  earnings 
of  deceased,  minimum  $5.00  maximum  $12.00  a  week,  for  335 
weeks,  not  to  exceed  $4,000.00.  Partial  dependents,  amount  pro- 
portionate to  total  dependents,  subject  to  same  limitations.  Non- 
fatal cases:  Total  disability,  65  per  cent,  of  average  weekly 
earnings,  minimum  $5.00  maximum  $12.00  a  week,  not  to  ex- 
ceed eight  years  and  maximum  of  $5,000,00.  Partial  disability, 
65  per  cent,  of  difference  in  earning  capacity,  maximum  $12.00 
a  week,  not  to  exceed  335  weeks  or  $4,000.00.  Specific  payments 
are  provided  for  specific  dismemberments. 

Insurance.  Eequired  in  some  authorised  corporation,  associa- 
tion, or  organisation,  or  self-insurance  may  be  permitted  on 
proof  of  financial  ability. 

Administratio7i.  By  a  ^^Vorkmen's  Compensation  Board"  con- 
sisting of  three  members,  one  for  each  of  three  Compensation 
Districts.  Hearings  held  by  member  of  Board  or  by  Eeferee,  and 
may  be  held  anywhere.  Decision  is  decision  of  Board  when 
approved  by  the  Board.  Appeal  may  be  taken  to  the  Court  on 
questions  of  law. 

LOUISIANA 

Nature  of  law.     Elective. 

Application.  The  law  applies  to  certain  enumerated  "hazard- 
ous trades,  businesses,  and  occupations."  Employers  and  em- 
ploA^ees  in  other  occupations  can  come  under  the  law  by  voluntary 
agreement. 

Waiting  period.  One  week.  If  disability  lasts  six  weeks  or 
longer,  compensation  for  the  first  weeks  shall  be  paid. 

Statutory  medical  aid.     Not  to  exceed  $150.00. 

Indemnity.  Fatal  cases :  Expenses  of  last  sickness  and  burial 
in  all  cases,  not  to  exceed  $100.00.     Dependents,  25  per  cent,  to 


258  WOEKMEN'S  COMPENSATIOIT 

50  per  cent,  of  wages  of  deceased,  according  to  number  of  depen- 
dents and  nature  of  dependency,  minimum  $3.00  maximum 
$10.00  a  week,  for  300  weeks.  Non-fatal  cases:  Total  dis- 
ability, 50  per  cent,  of  wages,  minimum  $3.00  maximum  $10.00 
a  week,  for  300  weeks.  Partial  disability,  50  per  cent,  of  differ- 
ence in  earning  capacity  before  and  after  injury,  maximum 
$10.00  a  week,  for  300  weeks.  Specific  payments  are  provided 
for  specific  dismemberments. 

Insurance.     Not  required. 

Administration.  Claims  settled  by  agreement,  subject  to  ap- 
proval of  the  Court.     No  special  administrative  provisions. 

MAINE 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application  as  to  all  private 
employers,  excepting  farm  labourers,  domestic  servants,  seamen 
on  vessels  engaged  in  interstate  and  foreign  commerce,  and  casual 
employees,  also  employees  engaged  in  the  work  of  cutting,  hauling, 
rafting,  or  driving  logs. 

Waiting  period.     Two  weeks. 

Statutory  medical  aid.  Two  weeks,  up  to  $30.00,  except  in 
cases  of  major  surgical  operations ;  then  the  Commission  fixes  the 
obligation. 

Indemnity.  Fatal  cases:  No  dependents,  expenses  of  last 
sickness  and  burial,  not  to  exceed  $200.00.  Total  dependents,  50 
per  cent,  of  average  weekly  wages,  minimum  $4.00  maximum 
$10.00  a  week,  for  300  weeks.  Partial  dependents,  such  pro- 
portion of  payments  to  total  dependents  as  the  amount  contrib- 
uted by  deceased  to  their  support  bore  to  his  annual  earnings. 
Non-fatal  cases :  Total  disability,  50  per  cent,  of  average 
weekly  wages,  minimum  $4.00  maximum  $10.00  a  week,  for 
500  weeks,  up  to  $3,000.00.  Partial  disability,  50  per  cent, 
of  difference  in  earnings  before  and  after  injury,  maximum 
$10.00  a  week,  for  300  weeks.  Specific  payments  are  provided 
for  specific  dismemberments,  then  compensation  for  partial  dis- 
ability if  such  disability  exists. 


DIGEST  259 

Insurance.  Required  in  approved  stock  or  mutual  company 
or  association. 

Administration.  By  an  "Industrial  Accident  Commission" 
consisting  of  three  members.  Hearings  held  by  Chairman,  and 
may  be  held  anywhere.  Appeal  to  the  Court  on  questions  of 
law. 

MARYLAND 

Nature  of  law.  Compulsory  as  to  specijfied  "extra  hazardous" 
occupations.  Employers  and  employees  in  occupations  not  enu- 
merated as  "extra  hazardous"  may  come  under  the  act  by  joint 
election. 

Application.  The  law  is  of  limited  application,  and  applies 
to  certain  enumerated  employments.  It  exempts  farm  labourers, 
domestic  servants,  country  blacksmiths,  casual  employees,  and 
employees  whose  salary  is  in  excess  of  $2,000.00  a  year. 

Waiti7ig  period.  Two  weeks  in  cases  of  temporary  disability. 
One  week  in  cases  of  permanent  total  disability. 

Statutory  medical  aid.     Not  to  exceed  $150.00. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases  not  to 
exceed  $75.00.  Total  dependents,  50  per  cent,  of  average  weekly 
wages  of  deceased  for  remainder  of  period  between  death  and 
eight  years  from  date  of  injury,  minimum  $1,000.00  maximum 
$4,250.00.  Partial  dependents,  same  payments  as  for  total  de- 
pendents for  such  portion  of  eight  years  as  Commission  shall 
determine,  maximum  $3,000.00.  Non-fatal  cases:  Total  dis- 
ability, 50  per  cent,  of  average  weekly  wages,  minimum  $5.00 
maximum  $12.00  a  week,  not  to  exceed  $5,000.00.  Partial  dis- 
ability, 50  per  cent,  of  difference  in  average  weekly  wages,  maxi- 
mum $12.00  a  week,  not  to  exceed  $3,000.00.  Specific  pay- 
ments are  provided  for  specific  dismemberments. 

Insurance.  Required  in  stock  company  or  mutual  association, 
or  State  Fund.  Self  insurance  permitted  on  proof  of  financial 
ability. 

Administration.  By  a  "State  Industrial  Accident  Commis- 
sion" consisting  of  three  members.     Hearings  held  by  Commis- 


260  WORKMEK'S  COMPEKSATION 

sion  or  by  Arbitration  Committee;  hearings  may  be  held  any- 
where.    Appeal  to  the  Court  from  decision  of  Commission. 

MASSACHUSETTS 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  excepting 
domestic  servants,  farm  labourers,  seamen  on  vessels  engaged  in 
interstate  or  foreign  commerce,  casual  employees,  and  those 
whose  employment  is  not  in  the  usual  course  of  the  trade,  busi- 
ness, profession,  or  occupation  of  their  employers. 

^Yaiting  period.     Ten  days. 

Statutory  medical  aid.  Two  weeks.  The  Board  may  order 
further  treatment  in  unusual  cases. 

Indemnity.  Fatal  cases:  No  dependents,  expenses  of  last 
sickness  and  burial,  not  to  exceed  $300.00.  Total  dependents, 
66%  per  cent,  of  average  weekly  wages  of  deceased,  minimum 
$4.00  maximum  $10.00  a  week,  for  500  weeks,  not  to  exceed 
$4,000.00.  Partial  dependents,  proportion  of  payments  to  total 
dependents  that  amount  contributed  by  deceased  to  support  of 
partial  dependents  bore  to  annual  earnings.  Non-fatal  cases: 
Total  disability,  66%  per  cent,  of  average  weekly  wages,  mini- 
mum $4.00  maximum  $10.00  a  week,  for  500  weeks,  not  to 
exceed  $4,000.00.  Partial  disability,  66%  per  cent,  of  difference 
in  average  weekly  wages,  maximum  $10.00  a  week,  subject  to 
same  limits  as  for  total  disability.  Specific  payments  are  pro- 
vided for  specific  dismemberments  in  addition  to  other  compen- 
sation. 

Insurance.  Required  in  Massachusetts  Employees  Insurance 
Association,  or  in  some  liability  company  authorised  to  do  busi- 
ness in  the  State. 

Administration.  By  an  "Industrial  Accident  Board"  consist- 
ing of  five  members.  Hearings  held  by  committee  of  arbitration, 
and  may  be  held  anywhere.  Decision  of  committee  decision  of 
Board  unless  claim  for  review  is  filed  with  the  Board.  Appeal 
to  the  court  from  decision  of  Board  on  questions  of  law. 


DIGEST  261 

MICHIGAN 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  excepting  do- 
mestic servants  and  farm  labourers,  and  casual  employees. 

Waiting  period.  Two  weeks,  but  if  disability  continues  for 
eight  weeks  or  longer  compensation  is  payable  from  date  of 
injury. 

Statutory  medical  aid.     Three  weeks. 

Indemnity.  Fatal  cases:  No  dependents,  expenses  of  last 
sickness  and  burial,  not  to  exceed  $200.00.  Total  dependents, 
50  per  cent,  of  average  weekly  wages  of  deceased,  minimum 
$4.00  maximum  $10.00  a  week,  for  300  weeks.  Partial  depend- 
ents, proportion  of  amount  payable  to  total  dependents  that 
amount  contributed  to  support  of  partial  dependents  by  deceased 
bore  to  his  annual  earnings.  Non-fatal  cases :  Total  disability, 
50  per  cent,  of  average  weekly  wages,  minimum  $4.00  maxi- 
mum $10.00  a  week,  for  500  weeks,  not  to  exceed  $400.00. 
Partial  disability,  50  per  cent,  of  difPerence  in  average  weekly 
wages  before  and  after  injury,  maximum  $10.00  a  week,  for  300 
weeks.  Specific  payments  are  provided  for  specific  dismember- 
ments. 

Insurance.  Eequired  in  stock  or  mutual  companies,  in  state 
"Accident  Fund,"  or  self  insurance  may  be  permitted  on  proof 
of  financial  ability. 

Administration.  By  an  "Industrial  Accident  Board"  consist- 
ing of  three  members.  Committee  of  arbitration  appointed  by 
Board  holds  hearings,  which  may  be  held  anywhere.  Decision 
of  committee  decision  of  Board  unless  claim  for  review  is  filed. 
Appeal  to  the  court  from  decision  of  Board  on  questions  of  law. 

MINNESOTA 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  excepting 
common  carriers  by  steam  railroads,  domestic  servants,  farm 
labourers  and  casual  employees. 


262  WORKMEN'S  COMPENSATION 

Waiting  period.  Two  weeks  in  cases  of  temporary  total  or 
temporary  partial  disability. 

Statutory  medical  aid.  During  90  days  not  to  exceed  $100.00, 
but  court  may  order  treatment  for  100  days  not  to  exceed  $200.00. 

Indemnity.  Fatal  cases:  Expenses  of  last  sickness  and 
burial  in  all  cases,  not  to  exceed  $100.00.  Total  dependents, 
payments  ranging  from  25  per  cent,  to  60  per  cent,  of  wages  of 
deceased,  according  to  number  of  dependents,  minimum  $6.50 
maximum  $11.00  a  week,  for  300  weeks.  Partial  dependents, 
that  proportion  of  benefits  for  total  dependency,  subject  to  same 
limits,  which  amount  contributed  to  their  support  by  deceased 
bore  to  total  income  of  partial  dependents.  Non-fatal  cases: 
Total  disability,  50  per  cent,  of  wages,  minimum  $6.50  maxi- 
mum $11.00  a  week,  for  550  weeks,  not  to  exceed  $5,000.00. 
Partial  disability,  50  per  cent,  of  difference  in  earnings,  maxi- 
mum $11.00  a  week,  for  300  weeks.  Specific  payments  are  pro- 
vided for  specific  dismemberments. 

Insurance.     Not  required. 

Administration.  By  agreement,  or  by  the  court  in  cases  of 
dispute.  The  Commissioner  of  Labor  advises  in  disputed  cases, 
and  assists  in  adjusting  differences. 

MONTANA 

Nature  of  law.     Elective. 

Application.  The  law  applies  to  employments  enumerated  as 
hazardous,  and  any  other  hazardous  employments  that  may  arise. 
Domestic  servants,  farm  and  agricultural  labourers,  and  casual 
employees  are  excepted. 

Waiting  period.     Two  weeks. 

Statutory  medical  aid.  Two  weeks,  not  to  exceed  $50.00. 
Special  operating  fee  of  $50.00  in  hernia  cases. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases  if 
death  occurs  within  six  months  not  exceeding  $75.00.  Depend- 
ents, payments  ranging  from  30  per  cent,  to  50  per  cent,  of 
wages  of  deceased,  according  to  kinship  of  dependents,  minimum 
$6.00    maximum    $10.00    a   week,   for    400    weeks.     Non-fatal 


DIGEST  263 

cases:  Total  disability,  50  per  cent,  of  wages,  minimum  $6.00 
maximum  $10.00  a  week,  for  400  weeks,  then  $5.00  a  week  dur- 
ing disability.  Partial  disability,  50  per  cent,  of  difference  in 
earnings,  maximum  $10.00  a  week,  for  150  weeks  in  permanent 
partial  disability  cases,  and  50  weeks  in  temporary  partial  dis- 
ability cases.  Specific  payments  are  provided  for  specific  dis- 
memberments. 

Insurance.  Eequired  in  authorised  insurance  company  or 
State  Fund,  or  self  insurance  is  permitted  on  proof  of  financial 
ability. 

Administration.  By  an  "Industrial  Accident  Board"  consist- 
ing of  three  members.  Board  or  any  member  may  hold  hearings, 
which  may  be  held  anywhere.  Appeal  to  the  court  from  decision 
of  Board. 

NEBEASKA 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  applying  to 
every  employer  employing  more  than  five  employees.  Those  em- 
ployers and  employees  not  under  the  act  may  come  under  it  by 
joint  election.  Domestic  servants,  farm  labourers,  and  casual 
employees  are  excepted. 

Waiting  period.  Fourteen  days,  but  if  the  disability  con- 
tinues for  eight  weeks  or  longer  compensation  begins  from  date 
of  injury. 

Statutory  medical  aid.  For  first  21  days,  not  to  exceed 
$300.00. 

Indemnity/.  Fatal  cases:  Expenses  of  last  sickness  and 
burial  in  all  cases  not  to  exceed  $100.00.  Total  dependents, 
50  per  cent,  of  wages  of  deceased,  minimum  $5.00  maximum 
$10.00  a  week,  during  dependency  not  exceeding  350  weeks. 
Partial  dependents,  same  proportion  of  benefits  for  total  depend- 
ency as  contributions  of  deceased  to  support  of  partial  depend- 
ents bore  to  his  wages.  Non-fatal  cases:  Total  disability,  50 
per  cent,  of  wages,  minimum  $5.00  maximum  $10.00  a  week, 
for  300  weeks.     After  that  40  per  cent,  of  wages,  minimum 


264  WORKMEN'S  COMPENSATION 

$4.00  maximum  $8.00  a  week,  during  disability.  Partial  dis- 
ability, 50  per  cent,  of  difference  in  earnings,  maximum  $10.00 
a  week,  for  300  weeks.  Specific  payments  are  provided  for  spe- 
cific dismemberments. 

Insurance.     Not  required. 

Administration.  By  agreement,  by  arbitration,  or  by  submis- 
sion to  the  court, 

NEVADA 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  including  all 
employments  where  two  or  more  employees  are  employed.  Farm 
or  agricultural  labour  and  domestic  servants  are  excepted. 

Waiting  period.  One  week,  but  if  the  disability  continues  be- 
yond two  weeks  compensation  shall  be  payable  from  date  of 
injury. 

Statutory  medical  aid.     Four  weeks. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases  not  to 
exceed  $125.00.  Total  dependents,  payments  ranging  from  40 
per  cent,  to  60  per  cent,  according  to  number,  minimum  $20.00 
maximum  $60.00  a  month,  for  100  months,  not  exceeding 
$6,000.00.  Partial  dependents,  proportion  of  amount  payable  to 
total  dependents  that  amount  contributed  by  deceased  to  support 
of  total  dependents  bore  to  his  wages,  not  to  exceed  100  months. 
Non-fatal  cases:  Total  disability,  50  per  cent,  of  average 
monthly  wages,  minimum  $20.00  maximum  $60.00  a  month, 
not  exceeding  100  months  or  $5,000.00.  Partial  disability,  50 
per  cent,  of  difference  in  earnings  before  and  after  injury,  maxi- 
mum $40.00  a  month,  for  60  months.  Specific  payments  are 
provided  for  specific  dismemberments,  in  addition  to  other  com- 
pensation. 

Insurance.  Employers  electing  to  come  under  the  act  must 
insure  in  the  State  Insurance  Fund. 

Administration.  By  the  "Nevada  Industrial  Commission" 
consisting  of  three  members.  There  appears  to  be  no  provision 
for  appeal  from  the  decision  of  the  Commission. 


DIGEST  265 

NEW  HAMPSHIRE 

Nature  of  law.     Elective. 

Application.  The  law  is  of  limited  application,  and  applies 
to  certain  specified  classes  of  occupations  dangerous  to  life  and 
limb,  and  to  certain  occupations  where  five  or  more  persons  are 
engaged  in  manual  or  mechanical  labour. 

Waiting  period.     Two  weeks. 

Statutory  medical  aid.  None  except  in  case  of  death  without 
dependents,  then  expenses  of  medical  attendance  and  burial  not 
to  exceed  $100.00. 

Indemnitij.  Fatal  cases :  No  dependents,  medical  attendance 
and  burial  expenses  not  to  exceed  $100.00.  Total  dependents, 
150  times  average  weekly  wages  of  deceased,  not  to  exceed 
$3,000.00.  Partial  dependents,  proportion  of  amount  payable  to 
total  dependents  that  amount  contributed  by  deceased  to  support 
of  partial  dependents  bore  to  his  wages.  Non-fatal  cases: 
Total  disability,  50  per  cent,  of  average  weekly  earnings,  maxi- 
mum $10.00  a  week,  for  300  weeks.  Partial  disability,  50  per 
cent,  of  difference  in  earning  capacity,  maximum  $10.00  a  week, 
for  300  weeks. 

Insurance.  No  requirements  for  insurance.  Employer  elect- 
ing act  must  satisfy  Commissioner  of  Labor  of  his  financial 
ability,  or  file  bond. 

Administration.  Disputes  not  settled  by  agreement  are  deter- 
mined by  an  action  in  equity. 

NEW  JERSEY 

Nature  of  laiv.     Elective. 

Application.  The  law  is  of  general  application,  excepting 
casual  employees  and  employees  receiving  a  greater  salary  than 
$1,200.00  a  year. 

Waiting  period.     Two  weeks. 

Statutory  medical  aid.     Two  weeks,  not  to  exceed  $50.00. 

Indemnity.  Fatal  cases:  Expenses  of  last  sickness  and 
burial  in  all  cases,  not  to  exceed  $100.00.     Dependents,  35  per 


266  WORKMEN'S  COMPENSATION 

cent,  to  60  per  cent,  of  wages  of  deceased,  according  to  number 
of  dependents,  minimum  $5.00  maximum  $10.00  a  week,  for 
300  weeks.  Non-fatal  cases:  Total  disability,  50  per  cent,  of 
wages,  minimum  $5.00  maximum  $10.00  a  week,  for  400 
weeks.  Partial  disability,  50  per  cent,  of  wages,  minimum 
$5.00  maximum  $10.00  a  week,  based  upon  extent  of  disability, 
for  300  weeks.  Specific  payments  are  provided  for  specific  dis- 
memberments. 

Insurance.     No  provisions. 

Administration.  By  agreement  subject  to  approval  of  the 
''Workmen's  Compensation  Aid  Bureau,"  or  by  submission  to  the 
court.     Appeal  to  the  Supreme  Court  on  questions  of  law. 

NEW  YORK 

Nature  of  law.  Compulsory  as  to  certain  enumerated  occupa- 
tions. Elective  as  to  the  occupations  not  included  in  the  enu- 
merated list. 

Application:  The  law  is  of  limited  application,  and  applies 
to  certain  enumerated  "hazardous"  employments.  Farm  labour- 
ers and  domestic  servants  are  excepted. 

Waiting  period.     Two  weeks. 

Statutory  medical  aid.     During  60  days. 

Indemnity.  Fatal  cases :  Burial  expenses  in  all  cases  not  to 
exceed  $100.00.  Dependents,  payments  during  dependency, 
ranging  from  25  per  cent,  to  66%  per  cent,  of  wages  of  deceased, 
according  to  nature  of  dependency  and  kinship  to  deceased. 
Payments  based  upon  maximum  wages  of  $100.00  a  month. 
Non-fatal  cases:  Total  disability,  66%  per  cent,  of  average 
weekly  wages,  minimum  $5.00  maximum  $20.00  a  week,  during 
disability.  Partial  disability,  66%  per  cent,  of  difference  in 
earning  capacity,  maximum  $20.00  a  week,  not  to  exceed  $3,500. 
Specific  payments  are  provided  for  specific  dismemberments. 

Insurance.  Required  in  stock  corporation,  mutual  association, 
or  State  Fund.  Self  insurance  permitted  on  proof  of  financial 
ability. 


DIGEST  267 

Administration.  By  the  "State  Industrial  Commission"  con- 
sisting of  five  members.  Hearings  are  held  by  a  Commissioner 
or  a  Deputy  Commissioner,  and  may  be  held  any^vhere.  Appeal 
may  be  taken  to  the  court  from  decision  of  Commission  on  ques- 
tions of  law,  or  Commission  may  certify  questions  of  law  to  the 
court  for  decision. 

OHIO 

Nature  of  law.  Compulsory  as  to  employers  of  five  or  more 
workmen  in  the  same  business  or  same  establishment. 

Application.  The  law  is  of  general  application  to  all  employ- 
ers of  five  or  more  persons  in  the  same  business  or  establishment. 
Employers  not  subject  to  the  act  may  come  under  it  by  election. 

Waiting  period.     One  week. 

Statutory  medical  aid.     Not  exceeding  $200.00. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases  not  to 
exceed  $150.00.  Total  dependents,  66%  per  cent,  of  average 
weekly  wages  of  deceased  for  6  years,  minimum  $1,500.00  maxi- 
mum $3,750.00.  Partial  dependents,  %Q%  per  cent,  of  average 
weekly  wages  of  deceased  for  such  portion  of  6  years  as  the  Com- 
mission may  determine,  maximum  $3,750.00.  N"on-fatal  cases: 
Total  disability,  66%  per  cent,  of  average  weekly  wages,  mini- 
mum $5.00  maximum  $12.00  a  week,  during  continuance  of  dis- 
ability. Partial  disability,  66%  per  cent,  of  loss  of  earning 
capacity,  maximum  $12.00  a  week,  not  to  exceed  $3,750.00. 
Specific  payments  are  provided  for  specific  dismemberments. 

Insurance.  Required  in  "State  Insurance  Fund,"  but  employ- 
ers may,  when  permitted  by  the  Commission,  carry  their  own 
insurance  or  maintain  insurance  funds,  provided  they  contribute 
to  the  reserves  of  the  "State  Insurance  Fund." 

Administration.  By  the  "Industrial  Commission."  Appeal 
to  the  court  from  the  decision  of  the  Commission. 

OKLAHOMA 

Nature  of  law.  Compulsory  as  to  certain  specified  ^Tiazard- 
ous  employments." 


268  WOKKMEN'S  COMPENSATION 

Applicution.  The  law  is  of  limited  application,  applying  to 
enumerated  "hazardous  employments"  where  two  or  more  work- 
men are  employed.  Any  other  hazardous  occupations  that  may 
arise  are  covered.  Agricultural,  horticultural,  retail  mercantile 
pursuits,  dairy  and  stock  raising  are  excepted. 

Waiting  period.     Fourteen  days. 

Statutory  medical  aid.     For  15  days  after  injury. 

Indemnity.  Fatal  cases:  Because  of  constitutional  compli- 
cations the  act  was  not  made  to  apply  to  fatal  cases.  Non-fatal 
cases :  Total  disability,  50  per  cent,  of  average  weekly  wages, 
minimimi  $6.00  maximum  $10.00  a  week,  for  500  weeks. 
Partial  disability,  50  per  cent,  of  difference  in  wages  before  and 
after  injury,  maximum  $10.00  a  week,  for  300  weeks.  Specific 
payments  are  provided  for  specific  dismemberments. 

Insurance.  Eequired  in  stock  company,  mutual  association, 
or  by  interinsurance.  Self  insurance  is  permitted  on  proof  of 
financial  ability. 

Administration.  By  the  "State  Industrial  Commission"  con- 
sisting of  three  members.  Commission  may  require  hearing  be- 
fore committee  of  arbitration;  hearings  may  be  held  anywhere. 
Decision  of  Commission  final  on  questions  of  fact;  appeal  may 
be  taken  to  the  court  from  decision  of  Commission  on  questions 
of  law. 

OREGON 

Nature  of  law.     Elective. 

Application.  The  law  is  of  limited  application,  applying  to 
certain  enumerated  "hazardous"  classes  of  occupations.  Em- 
ployers and  employees  in  occupations  not  under  the  act  may  come 
under  it  by  joint  election. 

Waiting  period.     None. 

Statutory  medical  aid.     Up  to  $250.00. 

Indemnity.  Fatal  cases :  Burial  expenses  in  all  cases  not  to 
exceed  $100.00.  Total  dependents,  payments  ranging  from 
$15.00  to  $50.00  a  month,  according  to  number  of  dependents. 
Partial  dependents,  50  per  cent,  of  average  support  received 


DIGEST  269 

from  deceased  during  the  preceding  year,  not  to  exceed  $30.00 
a  month.  Non-fatal  cases:  Total  disability,  payments  up  to 
60  per  cent,  of  monthly  wages  for  the  first  six  months,  then  pay- 
ments up  to  $50.00  a  month  during  disability,  depending  upon 
number  in  family.  Partial  disability,  proportionate  amount  cor- 
responding to  loss  of  earning  power,  for  two  years.  Specific 
payments  are  provided  for  specific  dismemberments. 

Insurance.  Compulsory  in  "Industrial  Accident  Fund,"  ad- 
ministered by  the  State,  when  compensation  is  elected. 

Administration.  By  "State  Industrial  Accident  Commission." 
Appeal  to  the  court  from  decision  of  the  Commission. 


PENNSYLVANIA 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  excepting 
only  domestic  service,  agriculture,  and  casual  employment. 

Waiting  period.     Fourteen  days. 

Statutory  medical  aid.  Up  to  $25.00,  unless  major  operation 
is  necessary,  then  up  to  $75.00. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases  not  to 
exceed  $100.00.  Payments  to  widow  or  widower  and  to  relatives 
in  the  direct  line,  ranging  from  20  per  cent,  to  60  per  cent,  of 
wages,  according  to  the  number  of  dependents,  minimum  $2.00 
maximum  $12.00  a  week,  for  300  weeks.  Payments  to  minor 
children,  ranging  from  15  per  cent,  to  50  per  cent,  of  wages, 
according  to  number,  until  they  reach  the  age  of  sixteen.  Pay- 
ments to  relatives  in  the  collateral  line  ranging  from  15  per  cent, 
to  25  per  cent.,  according  to  number.  Non-fatal  cases :  Total 
disability,  50  per  cent,  of  wages,  minimum  $5.00  maximum 
$10.00  a  week,  for  first  500  weeks,  maximum  $4,000.00.  Par- 
tial disahility,  50  per  cent,  of  difference  in  earning  power  before 
and  after  injury,  maximum  $10.00  a  week,  for  not  more  than 
300  weeks.  Specific  payments  are  provided  for  specific  dismem- 
berments. 

Insurance.    Eequired  in  stock  or  mutual  companies,  or  in 


2Y0  WORKMEN'S  COMPENSATION 

State   Fund.     Self  insurance   may   be   permitted   on   proof   of 
financial  ability. 

Administration.  By  a  "Workmen's  Compensation  Board" 
consisting  of  three  members.  The  Board  appoints  Eeferees,  and 
Eeferee  or  Board  conduct  hearings,  which  may  be  held  anywhere. 
Referee's  finding  of  fact  final  unless  Board  allows  an  appeal. 
Appeal  may  be  taken  to  the  court  from  decision  of  Board  on 
questions  of  law. 

EHODE  ISLAND 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  but  it  does 
not  apply  to  employers  who  employ  five  or  less  workmen.  Em- 
ployers not  under  the  act  may  come  under  it  by  election.  Do- 
mestic service,  agriculture,  casual  employees,  and  employees  who 
receive  remuneration  exceeding  $1,800.00  a  year  are  excepted. 

Waiting  period.     Two  weeks. 

Statutory  medical  aid.  During  the  first  two  weeks  after 
injury. 

Indemnity.  Fatal  cases:  No  dependents,  expenses  of  last 
sickness  and  burial,  not  exceeding  $200.00.  Total  dependents, 
50  per  cent,  of  average  weekly  wages  of  deceased,  minimum 
$4.00  maximum  $10.00  a  week,  for  300  weeks.  Partial  depen- 
dents, proportionate  part  of  benefits  to  total  dependents  that 
amount  contributed  to  support  of  partial  dependents  by  deceased 
bore  to  his  annual  earnings.  Non-fatal  cases :  Total  disability, 
50  per  cent,  of  average  weekly  wages,  minimum  $4.00  maxi- 
mum $10.00  a  week,  for  500  weeks.  Partial  disability,  50  per 
cent,  of  difference  in  average  weekly  wages  before  and  after  in- 
jury, maximum  $10.00  a  week,  for  300  weeks.  Specific  pay- 
ments are  provided  for  specific  dismemberments  in  addition  to 
other  compensation. 

Insurance.  Required  in  some  approved  stock  or  mutual  com- 
pany or  association.  Self  insurance  permitted  on  proof  of  finan- 
cial ability,  or  satisfactory  security  may  be  furnished. 


DIGEST  271 

Administration.  By  agreement,  or  by  submission  to  the 
Superior  Court  in  case  of  dispute.  Appeal  may  be  taken  to  the 
Supreme  Court  from  the  decision  of  the  Superior  Court. 

TEXAS 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  applying  to 
all  employers  who  have  five  or  more  employees  in  their  employ. 
Domestic  servants,  farm  labourers,  employees  of  railways  oper- 
ated as  common  carriers,  and  labourers  working  for  a  cotton  gin 
are  excepted. 

Waiting  period.     One  week. 

Statutory  medical  aid.     One  week. 

Indemnity.  Fatal  cases:  No  beneficiaries,  expenses  of  last 
sickness,  and  in  addition  funeral  expenses  not  to  exceed  $100.00. 
No  beneficiaries  but  creditors,  an  amount  not  exceeding  benefits 
due  to  dependents.  Beneficiaries,  60  per  cent,  of  average  weekly 
wages,  minimum  $5.00  maximum  $15.00  a  week,  for  360 
weeks,  compensation  to  be  distributed  according  to  the  law  pro- 
viding for  the  distribution  of  other  property  of  deceased.  Non- 
fatal cases:  Total  disability,  60  per  cent,  of  average  weekly 
wages,  minimum  $5.00  maximum  $15.00  a  week,  for  400 
weeks.  Partial  disability,  60  per  cent,  of  difference  in  average 
weekly  wages  before  and  after  injury,  maximum  $15.00  a  week, 
for  300  weeks.  Specific  payments  are  provided  for  specific  dis- 
memberments, in  addition  to  other  compensation. 

Insurance.  Employer  electing  act  must  insure  in  "Texas  Em- 
ployers' Insurance  Association,"  or  in  company  admitted  to  do 
business  in  the  State. 

Administration.  By  an  "Industrial  Accident  Board"  consist- 
ing of  three  members.  Board  or  any  member  may  hold  hear- 
ings, which  may  be  held  anywhere.  Appeal  to  the  Court  from 
decision  of  Board. 


272  WOKKMEN'S  COMPENSATION 

VEEMONT 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  excepting 
domestic  servants,  employers  who  regularly  employ  ten  men  or 
less,  casual  employees,  and  employees  whose  remuneration  ex- 
ceeds $1,500.00  a  year.  Employers  who  are  exempt  may  come 
under  the  act  by  election. 

Waiting  period.     Fourteen  days. 

Statutory  medical  aid.  During  first  fourteen  days,  not  to  ex- 
ceed $75.00. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases,  not 
to  exceed  $75.00.  Dependents:  15  per  cent,  to  45  per  cent,  of 
average  weekly  wages  of  deceased,  based  upon  a  minimum  wage 
of  $5.00  a  week  and  a  maximum  wage  of  $25.00  a  week,  accord- 
ing to  number  and  kinship  of  dependents,  and  nature  of  depen- 
dency, up  to  260  weeks,  and  subject  to  a  maximum  of  $3,500.00, 
Non-fatal  cases:  Total  disability,  50  per  cent,  of  average 
weekly  wages,  minimum  $3.00  maximum  $12.00  a  week,  for 
260  weeks.  Partial  disability,  50  per  cent,  of  difference  in  aver- 
age weekly  wages  before  and  after  accident,  maximum  $10.00  a 
week,  for  five  years.  Specific  payments  are  provided  for  specific 
dismemberments. 

Insurance.  Eequired  in  some  company  authorised  to  transact 
the  business  of  workmen's  compensation  insurance  in  the  State, 
or  by  deposit  of  securities.  Self  insurance  is  permitted  on  proof 
of  financial  ability. 

Administration.  By  the  "Industrial  Accident  Board"  consist- 
ing of  three  members.  Board  holds  hearings,  which  may  be  held 
anywhere.     Appeal  to  the  Court  from  decision  of  Board. 

WASHINGTON 

Nature  of  law.  Compulsory  as  to  specified  "extra  hazardous" 
employments. 

Application.  The  law  is  of  limited  application,  applying  to 
certain  enumerated  "extra  hazardous"  classes  of  occupations.     If 


DIGEST  273 

any  other  "extra  hazardous"  occupations  arise  they  will  come 
under  the  act. 

Waiting  period.  None,  but  no  compensation  is  payable  unless 
loss  of  earning  power  exceeds  5  per  cent. 

Statutory  medical  aid.  None,  but  benefits  are  increased  by 
50  per  cent,  for  the  first  six  months  in  total  temporary  disability 
cases. 

Indemnity.  Fatal  cases :  Burial  expenses  in  all  cases  not  to 
exceed  $75.00.  Dependents,  payments  to  widow  or  invalid 
^vidower  during  life,  or  until  remarriage,  and  to  minor  children 
until  the  age  of  16  is  reached,  ranging  from  $20.00  to  $35.00  a 
month,  according  to  the  number  of  children.  Payments  to  other 
dependents  equal  to  50  per  cent,  of  average  monthly  support 
received  from  deceased,  maximum  $20.00  a  month,  during  de- 
pendency. Non-fatal  cases :  Total  disability,  payments  rang- 
ing from  $20.00  to  $35.00  a  month,  according  to  number  in 
family,  increased  50  per  cent,  for  the  first  six  months,  maximum 
60  per  cent,  of  monthly  wages,  during  disability.  Partial  dis- 
ability, lump  sum  not  to  exceed  $1,500.00.  No  compensation 
unless  loss  of  earning  power  exceeds  5  per  cent. 

Insurance.     Eequired  in  the  "State  Accident  Fund." 

Administration.  By  the  "Industrial  Insurance  Department" 
consisting  of  three  members.  Appeal  to  the  Court  from  decision 
of  Department. 

WEST  VIEGINIA 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  excepting 
casual  employees,  domestic  and  agricultural  service,  travelling 
salesmen,  members  of  firms,  and  officers  of  associations  or  corpora- 
tions. 

Waiting  period.     One  week. 

Statutory  medical  aid.  Not  to  exceed  $150.00,  except  that  in 
permanent  disability  cases  the  Commissioner  may  order  treat- 
ment up  to  $300.00. 

Indemnity.  Fatal  cases:  Funeral  expenses  in  all  cases  not 
to  exceed  $75.00.     Total  dependents,  payments  to  a  widow  or 


2Y4  WORKMEN'S  COMPENSATION 

invalid  widower  and  children,  ranging  from  $20.00  to  $35.00  a 
month,  according  to  number  of  children,  until  each  child  reaches 
the  legal  age  of  employment,  and  until  death  or  remarriage  of 
widow  or  widower.  Payments  to  orphan  children  ranging  from 
$10.00  to  $30.00  a  month,  until  they  reach  the  age  of  15.  Other 
persons  who  are  total  dependents,  50  per  cent,  of  average  monthly 
support  from  deceased,  maximum  $20.00  a  month,  for  six  years. 
Partial  dependents,  50  per  cent,  of  average  monthly  support  re- 
ceived from  deceased  for  such  portion  of  six  years  as  Commis- 
sioner may  determine.  Non-fatal  cases:  Total  disability,  per- 
manent, 50  per  cent,  of  average  weekly  wages,  minimum  $4.00 
maximum  $8.00  a  week,  during  remainder  of  life.  Temporary, 
50  per  cent,  of  average  weekly  wages,  minimum  $5.00  maxi- 
mum $10.00  a  week,  for  twenty-six  weeks,  or  for  fifty-two  weeks 
in  case  of  certain  specific  injuries.  Partial  disability :  Perman- 
ent; payments  ranging  from  10  per  cent,  to  50  per  cent,  of  aver- 
age weekly  wages,  minimum  $4.00  maximum  $8.00  a  week, 
during  remainder  of  life.  Temporary :  50  per  cent,  of  weekly 
loss  in  wages,  maximum  $10.00  a  week. 

Insurance.  Eequired  in  "Workmen's  Compensation  Fund'' 
managed  by  the  "Compensation  Commissioner."  Self  insurance 
permitted  on  proof  of  financial  ability,  or  employers  may  form 
and  maintain  their  own  funds. 

Administration.  By  the  "Compensation  Commissioner." 
Claimant  may  appeal  to  the  Supreme  Court  of  Appeals  if  his 
right  to  receive  compensation  is  denied. 

WISCONSIN 

Nature  of  law.     Elective. 

Application.  The  law  is  of  general  application,  applying  to 
employers  of  four  or  more  employees  in  a  common  employment, 
excepting  farmers  and  farm  labourers,  casual  employees,  and 
employees  on  railways  operating  as  common  carriers. 

Waiting  period.  One  week,  except  in  cases  where  the  disability 
extends  beyond  four  weeks,  then  indemnity  is  payable  for  the 
first  week. 


DIGEST  275 

Statutory  medical  aid.     Ninety  days. 

Indemnity.  Fatal  cases  :  No  dependents,  burial  expenses  not 
exceeding  $100.00.  Total  dependents,  death  after  permanent 
total  disability,  four  times  average  annual  earnings,  but  when 
added  to  the  disability  indemnity  due  at  the  time  of  the  death  of 
deceased  shall  not  exceed  six  times  his  average  annual  earnings. 
Death  after  permanent  partial  disability,  four  times  average 
annual  earnings.  Partial  dependents,  an  amount  not  exceeding 
four  times  the  amount  devoted  to  the  support  of  partial  depen- 
dents by  deceased  during  the  year  preceding  death.  Death  bene- 
fits shall  be  paid  in  instalments  corresponding  to  65  per  cent, 
of  weekly  earnings  of  deceased.  Minimum  annual  wages, 
$375.00  to  $500.00,  maximum  $750.00  to  $1,250.00,  according 
to  employment.  Non-fatal  cases :  Total  disability,  65  per  cent, 
of  average  weekly  earnings,  increased  to  100  per  cent,  after  ninety 
days  in  cases  of  total  helplessness,  not  exceeding  six  times  aver- 
age annual  earnings  of  injured;  aggregate  disability  period  not 
to  exceed  fifteen  years  from  date  of  accident.  Partial  disability, 
65  per  cent,  of  weekly  loss  in  wages,  not  exceeding  four  times 
average  annual  earnings  and  not  exceeding  a  disability  period  of 
fifteen  years  from  date  of  accident.  Specific  payments  are  pro- 
vided for  specific  dismemberments.  (See  "Fatal  Cases"  for 
minimum  and  maximum  of  average  annual  earnings.) 

Insurance.  Insurance  is  permitted,  but  it  does  not  exempt  the 
employer  from  liability  under  the  law.  Employer  may  be  re- 
lieved from  liability,  after  liability  has  accrued,  by  deposit  with 
designated  trust  company,  or  by  purchase  of  an  annuity. 

Administration.  By  the  "Industrial  Commission"  consisting 
of  three  members.  Any  member  of  the  Commission  or  an  Exam- 
iner appointed  by  the  Commission  may  hold  hearings,  which  may 
be  held  anywhere.  Commission  makes  its  award  after  final 
hearing.  Appeal  may  be  taken  to  the  Court  from  the  decision 
of  the  Commission. 

WYOMING 

Nature  of  law.  Compulsory  as  to  "extra  hazardous"  employ- 
ments. 


276  WORKMEN'S  COMPENSATION 

Application.  The  law  is  of  limited  application,  applying  to 
certain  enumerated  classes  of  "extra  hazardous"  occupations. 
Casual  employees,  employees  not  subject  to  the  hazards  of  the 
business,  and  those  holding  official  positions  or  standing  in  a  rep- 
resentative capacity,  are  excepted;  also  employees  engaged  in 
interstate  commerce. 

Waiting  period.     Ten  days. 

Statutory  medical  aid.  Evidently  contemplated  by  the  law, 
but  no  provisions  appear  in  the  law  as  to  who  shall  pay  for  the 
treatment. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases  not  to 
exceed  $50.00,  unless  otherwise  by  agreement.  Dependents,  to 
widow  or  invalid  widower,  $1,000.00,  and  $60.00  a  year  for 
each  child  under  sixteen,  but  not  to  exceed  the  lump  sum  for  liv- 
ing spouse.  To  dependent  parents  if  no  widow,  widower,  or  chil- 
dren survive,  50  per  cent,  of  average  monthly  support  received 
from  the  deceased,  not  to  exceed  $500.00.  Non-fatal  cases: 
Permanent  total  disability,  $1,000.00  if  unmarried;  $1,200.00  if 
married  and  no  children;  this  sum  is  increased  by  $60.00  a 
year  for  each  child  up  to  the  time  that  the  child  reaches  the  age 
of  sixteen,  the  aggregate  payments  not  to  exceed  $1,800.00. 
Temporary  total  disability,  payments  ranging  from  $15.00  to 
$35.00  a  month,  according  to  number  in  family,  to  continue  dur- 
ing the  continuance  of  the  disability,  not  to  exceed  the  amount 
payable  for  permanent  total  disability.  No  provisions  for  tem- 
porary partial  disability.  Specific  payments  are  provided  for 
specific  dismemberments. 

Insurance.  Compulsory  in  "Industrial  Accident  Fund"  ad- 
ministered by  the  State. 

Administration.  By  the  Judge  of  the  District  Court,  subject 
to  trial  by  jury  in  certain  cases.  Appeal  to  Supreme  Court 
from  the  decision  of  the  District  Court. 


DIGEST  277 

UNITED  STATES  1 
Act  of  September  7,  1916 

Nature  of  law.     Compulsory. 

Application.  The  law  applies  to  all  employees  of  the  United 
States. 

Waiting  period.     Three  days. 

Statutory  medical  aid.  For  a  reasonable  time.  Such  services 
are  supplied  by  the  United  States  medical  officers  and  hospitals, 
but  when  this  is  not  practicable,  by  private  physicians  and  hos- 
pitals approved  by  the  Commission. 

Indemnity.  Fatal  cases:  Burial  expenses  in  all  cases  in  the 
discretion  of  the  Commission,  not  to  exceed  $100.00.  Depen- 
dents :  Payments  ranging  from  20  per  cent,  to  66%  per  cent. 
of  monthly  pay  of  deceased,  according  to  number  and  kinship 
to  deceased.  Payments  are  during  dependency,  or  until  minor 
children  reach  the  age  of  eighteen.  Payments  are  based  upon  a 
minimum  of  $50.00  and  a  maximum  of  $100.00  as  monthly 
pay  of  deceased.  Non-fatal  cases:  Total  disability,  66%  per 
cent,  of  monthly  pay  during  disability,  minimum  $33.33  maxi- 
mum $66.67.  Partial  disability,  66%  per  cent,  of  difference  be- 
tween previous  montlily  pay  and  monthlj'^  wage  earning  capacity 
after  the  beginning  of  partial  disability,  during  continuance, 
maximum  $66.67  a  month. 

Insurance.  The  "Employees'  Compensation  Fund"  is  estab- 
lished, an  appropriation  is  made  for  it,  and  it  is  to  be  supported 
by  such  sums  as  Congress  may  from  time  to  time  appropriate 
for  the  purpose. 

Administration.  By  the  "  United  States  Employees'  Com- 
pensation Commission"  consisting  of  three  members.  Principal 
office  is  in  Washington,  but  the  Commission  may  perform  its 
work  anywhere.     Authority  of  Commission  is  absolute. 

1  This  act  was  drawn  in  accordance  with  the  standards  prescribed  by 
the  American  Association  for  Labor  Legislation. 


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Eastman,  Crystal.  The  American  Way  of  Distributing  In- 
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278 


BIBLIOGRAPHY  279 

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280  WORKMEN'S  COMPENSATION 

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page  45. 
Compensation  for  Accidents  to  Workpeople — Should  It  Be 
Administered  by  the  State?  J.  S.  Eowe,  page  57, 


BIBLIOGKAPHY  283 

State  Employers'  Liability  Insurance  (or  Workmen's  Compen- 
sation), E.  S.  Lott,  page  71. 
Rate  Making  Under  State  Supervision,  J.  T.  Stone,  page  87, 
Lott,  E.  S.     See  Liability  Insurance  Association. 
Low,  A.  M.     See  United  States  Government  Publication,  Bulle- 
tin of  the  Bureau  of  Labor,  Vol.  XIV,  page  534.     (May, 
1907.) 
Lyman,  T.  U.     Claim  Settlements  Under  Compensation  Laws, 
the  Golden  Anniversary  Convention,  The  Travelers  In- 
surance Company,  1914,  page  130. 
McKitrick,  Eeuben,  Accident  Insurance  for  "Workmen,  Compara- 
tive Legislative  Bulletin,  No.  20,  July,  1909,  Wisconsin 
State  Library,  Madison. 
McVey,  F.  L.     Modern  Industrialism,  D.  Appleton  &  Co.,  New 

York,  1904. 
Massachusetts,  Publications  of,  Boston : 

Bureau  of  Labor  Statistics,  Thirty-first  Annual  Eeport,  Part 

II,  1901. 
Report  of  Committee  on  Relations  Between  Employer  and  Em- 
ployee, 1904. 
Report  of  Commission  on  Compensation  for  Industrial  Acci- 
dents, 1912. 
Reports  of  Cases  Under  the  Workmen's  Compensation  Act. 
Reports  of  the  Industrial  Accident  Board. 
Fifty-ninth  Insurance  Report,  Life  and  Miscellaneous,  1914. 
Report  on  Workmen's  Compensation  Insurance,  Commission  to 
Investigate  Practices  and  Rates,  1915. 
Merrels,  F.  B.     See  The  Insurance  Institute  of  Hartford,  Inc. 
Michigan,  Publication  of,  Lansing : 

Bulletin  No.  3,  Industrial  Accident  Board,  December,  1913. 
Mitchell,  John.     See  American  Association  for  Labor  Legisla- 
tion. 
National  Association  of  Industrial  Accident  Boards  and  Commis- 
sions,  Proceedings  of  Second  Annual   Session,   Seattle, 
1915. 


284  WOKKMEN'S  COMPENSATION 

New  York,  Publications  of,  Albany : 
Senate  Journal,  1898. 
Eeport  to  tbe  Legislature,  Employers'  Liability  Commission, 

1910. 
Ogg,  F.  A.     Social  Progress  in  Contemporary  Europe,  The  Mac- 

Millan  Company,  New  York,  1913. 
Ohio,  Publications  of,  Columbus : 

Workmen's  Compensation  Act,  with  Notes,  etc.,  1912. 
Eeports  of  State  Liability  Board  of  Awards. 
Ohio  State  Insurance  Law,  with  Comments  Thereon,  a  pamphlet 

published   by   The   Travelers   Insurance    Co.,   Hartford, 

Conn.,  1911. 
Packer,  Launcelot.     See  United  States  Government  Publications, 

Bulletin  of  the  Bureau  of  Labor,  Vol.  XIV,  page  579. 

(May,  1907.) 
Page,  B.  A.     See  The  Insurance  Institute  of  Hartford,  Inc. 
Parkinson,  T.  I.     See  American  Association  for  Labor  Legisla- 
tion. 
Patterson,   J.   V.     Workmen's   Compulsory   Insurance   System, 

State  of  Washington,  a  Criticism,  published  in  pamphlet 

form  by  Mr.  Patterson,  Seattle. 
Eandolph,  Carmen  F.     Brief  of,  see  United  States  Government 

Publications,  Eeport  of  Employers'  Liability  Commission. 
Ehodes,  J.  E.  2d.     See  The  Insurance  Institute  of  Hartford, 

Inc. 
Eowe,  J.  S.     See  Liability  Insurance  Association. 
Eubinow,  I.  M.     Social  Insurance,  Henry  Holt  &  Co.,  New  York, 

1913. 
Standard  of  Health  Insurance,  Henry  Holt  &  Co.,  New  York, 

1916. 
Scott,  Laura.     See  American  Association  for  Labor  Legislation. 
Seager,  H.  E.     Social  Insurance,  The  MacMillan  Company,  New 

York,  1910. 
Sherman,  P.  T.     Certain  Aspects  of  Insurance  Under  the  For- 
eign   Compensation    Laws,    pamphlet   published   by   the 
!  Bureau  of  Publicity,  Hartford,  Conn.,  1912. 


BIBLIOGRAPHY  285 

Liability  and  Workmen's  Compensation  Insurance  on  the  Ee- 
ciprocal  or  Inter-Insurance  Plan,  pamphlet,  New  York, 
1916. 
See   American   Association  for   Labor  Legislation;  also   Lia- 
bility Insurance  Association. 
Stimson,  F.  J.     Popular  Law  Making,  Charles  Scribner's  Sons, 

New  York,  1910. 
Stone,  J.  T.     See  Liability  Insurance  Association. 
The  Insurance  Institute  of  Hartford,  Inc.,  Hartford,  Conn.,  Pub- 
lication of : 
Accident  and  Health  Insurance,  1915 : 

The  Scope  of  Accident  Insurance,  J.  E.  Rhodes,  2d,  page  10. 
The  History  and  Development  of  Accident  Insurance,  W.  C. 

Faxon,  page  19. 
Accident  Underwriting,  B.  A.  Page,  page  30. 
Liability  and  Compensation  Lectures,  1913  : 

The  Eelation  of  Master  and  Servant,  E.  S.  Berry,  page  14. 
The  Liability  Contract,  J.  E.  Ehodes,  2d,  page  25. 
Workmen's  Compensation  in  Europe,  M.  M.  Dawson,  page 

77. 
Workmen's    Compensation   in   the    United    States,   W.    G. 

Cowles,  page  90. 
Compensation  Administration,  F.  B.  Merrels,  page  98. 
Administration   of   Compensation  Laws,   0.   E.   Beckwith, 

page  102. 
State  Insurance — Its  Adaptability  to  This  Country,  S.  H. 

Wolfe,  page  109. 
Some  Medical  Features  of  Workmen's  Compensation,  F.  B. 
Merrels,  page  120. 
Proceedings,  Vol.  IV,  1911 : 

Compensation  for  Industrial  Accidents,  L.  W.  Hatch,  page 
22. 
Proceedings,  Vol.  VII,  1914: 

Group  Insurance,  B.  D.  Flynn,  page  81. 
Tolman,  W.  H.     Safety,  Harper  &  Bros.,  New  York,  1913. 
United  States  Government  Publications,  Washington : 


286  WOEKMEN'S  COMPENSATION 

Abridgment  of  the  Messages  and  Documents,  1906,  1907,  and 

1908. 
Bulletins  of  the  Bureau  of  Labor : 

Vol.  XI,  (March,  1905).     The  State  Co-operative  Accident 

Fund  of  Maryland,  page  645. 
Vol.  XIV,  (May,  1907).     Short  history  of  Labor  Legisla- 
tion in  Great  Britain,  A.  M.  Low,  page,  534. 
Same.     British  Workmen's  Compensation  Acts,  Launcelot 

Packer,  page  579. 
Vol.  XVI,   (January,  1908).     Liability  of  Employers  for 

Injuries  to  Employees,  L.  D.  Clark,  page  1. 
Vol.  XXI,  (September,  1910).     Eecent  Action  Eelating  to 
Employers'  Liability  and  Workmen's  Compensation,  L.  D. 
Clark,  page  675. 
Bulletins  of  the  Bureau  of  Labor  Statistics : 

No.   126.     Workmen's  Compensation  Laws  of  the  United 
States  and  Foreign  Countries,  1913.     Note  Article  by  C. 
H.  Verrill  on  Workmen's  Compensation  Laws  of  Foreign 
Countries,  page  131. 
No.  148.     Labor  Laws  of  the  United  States,  1913. 
No.  160.     Labor  Legislation  of  1914. 
No.  185.     Compensation  Legislation  of  1914  and  1915. 
No.  186.     Labor  Legislation  of  1915. 

No.  803.     Compensation  Laws  of  the  United  States  and  For- 
eign Countries,  1916. 
Compulsory  Insurance  in  Germany,  J.  G.  Brooks,  Fourth  Spe- 
cial Eeport  of  the  Commissioner  of  Labor,  1893. 
Congressional  Eecord,  60th  Congress,  1st  Session. 
Opinions  of  the  Courts,  Workmen's  Compensation  and  Em- 
ployers' Liability,  Senate  Document  No.  475,  62d  Con- 
gress, 2d  Session. 
Opinions  of  the  Solicitor,  Department  of  Labor,  Workmen's 

Compensation  Cases,  1915. 
Eeport  of  Employers'  Liability  and  Workmen's  Compensation 
Commission,  Senate  Document  No.  338,  62d  Congress,  2d 
Session.     Brief  of  Carmen  F.  Eandolph,  pages  1395-1473. 


BIBLIOGKAPHY  287 

Workmen's  Compensation,  Eeport  Upon  Operation  of  State 
Laws,  Senate  Docmnent  No.  419,  63d  Congress,  2d  Ses- 
sion. 
A^^orkmen's  Insurance  and  Benefit  Funds  in  the  United  States, 
Twenty-third   Annual   Eeport   of   the    Commissioner   of 
Labor,  1908. 
Workmen's  Insurance  and  Compensation  Systems  of  Europe, 
Twenty-fourth  Annual   Eeport  of  the   Commissioner  of 
Labor,  1909. 
Verrill,  C.  H.     See  United  States  Government  Publication,  Bul- 
letin No.  126,  Bureau  of  Labor  Statistics. 
Villard,  H.   G.     Workmen's  Accident  Insurance   in   Germany, 

pamphlet.  New  York,  1913. 
Washington,  Publications  of,  Olympia: 

Annual  Eeports,  Industrial  Insurance  Department. 
Williams,  L.  C.     Compulsory  Workmen's  Compensation  Laws, 
Case  and  Comment,  Eochester,  New  York,  Vol.  XXII, 
page  296. 
Willoughby,  W.  F.     Workingmen's  Insurance,  T.  Y.  Crowell  & 

Co.,  New  York,  1898. 
Wisconsin,  Publications  of,  Madison : 

Bureau  of  Labor  and  Industrial  Statistics,  13th  Biennial  Ee- 
port, 1907-08,  Part  I,  pages  111-114. 
Wolfe,  S.  H.     See  Liability  Insurance  Association;  also  The  In- 
surance Institute  of  Hartford,  Inc. 
Yale  Insurance  Lectures,  a  Series  of  Lectures  Delivered  at  Yale 
University  during  the  year  1903-04,  published  by  the 
Volume  of  Fire  and  Miscellaneous  Lectures : 
Accident  Insurance,  S.  C.  Dunham,  page  204. 
Liability  Insurance,  S.  C.  Dunham,  page  226. 
Yaple,  W.  D.     See  American  Association  for  Labor  Legislation. 


TABLE  OF  CASES  CITED 


Adams    v.    Acme    White    Lead    & 

Color  Works,  138. 
Allen  V.  ^tna  Life  Insurance  Co., 

163. 
Bain  v.  Atkins,  163. 
Borgnis  v.  Falk,  122. 
Branconnier's  Case,  197. 
Cantwell's  Case,  189. 
Carr  v.  American  Locomotive  Co., 

four  cases,  17,  18,  19. 
Caspar  v.  Lewin,  75. 
Connolly  v.  Bolster,  163. 
Cunningham  v.  Northwestern  Im- 
provement Co.,  102,  114. 
DeWitt's  Case,  139. 
Farwell  v.  Boston  &  Worcester  R. 

R.  Corp.,  77. 
Employer's  Liability  Cases,  98, 
Franklin    v.    United    Railways    & 

Electric  Co.,  91,  114. 
Frye  v.  Bath  Gas  &  Electric  Co., 

163. 
Geceiwiec's  Case,  191. 
Gilbert's  Case,  190. 
Hawkins  v.  Bleakly,   127. 
Hayden    v.    Smithville    Mfg.    Co., 

22. 
Holden  v.  Hardy,  66. 
Hopkins   v.    Michigan    Sugar    Co., 

190. 
Hurle's  Case,   138. 
Ives   v.   South   Buffalo   R.   R.   Co., 

104,  116,  229. 
Jeffery  Mfg.  Co.  v.  Blagg,  127. 
Johnson's  Case,  138. 
Jule's  Case,  138. 
Kentucky  State  Journal  v.  Work- 


men's    Compensation     Board, 
J24. 

Kiley's  Case,  191. 

Leathers  v.  American  Tobacco  Co., 
76. 

LjTich's  Case,  189. 

Madden's  Case,  122. 

Maryland  Casualty  Co.  v.  Omaha 
Electric  Light  &  Power  Co., 
167. 

Mountain  Timber  Co.  v.  Washing- 
ton, 127. 

Munroe  v.  Maryland  Casualty  Co., 
167. 

Murray  v.  South  Carolina  R.  R. 
Co.,  77. 

Newton's  Case,  190. 

New  York  Central  R.  R.  Co.  v. 
White,  126,  236. 

Norway  Plains  Co.  v.  Boston  & 
Maine  R.  R.  Co.,  9. 

Oesting's  C^se,  191. 

Opinions  of  the  Justices,  120. 

Rochville's  Case,  191. 

Rumford  Falls  Paper  Co.  v.  Fidel- 
ity &  Casualty  Co.,   167. 

Schmidt  v.  The  Travelers  Insur- 
ance Co.,  167. 

Schwartz'  Case,  189. 

Silva's  Case,  189. 

Starnes  v.  Albion  Mfg.  Co.,  76. 

State  ex  rel.  Davis-Smith  Co.  v. 
Clausen,  117. 

Trieman's  Case,  138. 

Tvvoomey's  Case,  189. 

Weaver  v.  Maxwell  Motor  Co.,  197. 

Young  v.  Duncan,  122. 
289 


INDEX 


Accident,  determination  of,  188. 

must  happen  in  course  of  em- 
ployment, 188,  190-191. 

must  arise  out  of  employment, 
188,  190-191. 
Accident  insurance, 

inception  of,  30-31. 

purpose  of,  30. 

methods  of,  31-32. 

underwriting  of,  32-35. 

not  a  solution  of  the  problem  of 
industrial  accidents,  33-34, 
217. 

industrial  accident  insurance, 
34-35. 

workmen's  collective  policy,  35- 
37. 

by  mutual  associations,  31-32,  37. 

on  group  plan,  36,  217-218. 
Accident  prevention,  see  Conserva- 
tion. 
Administration     of     compensation 
systems, 

Germany,  50-51. 

Great  Britain,  60. 

United  States,  180-201. 

special  form  provided,  181. 

administration  by  courts,  181. 

principle  of  special  administra- 
tion, 182-185. 

commission  passes  on  questions 
of  fact,  184. 

appeal  to  courts  on  questions  of 
law,  184. 

administration  in  New  York, 
185-187. 


Advisory    opinions,     principle    of, 

121. 
Agricultural    labour,    excepted    in 

nearly  all  laws,  136. 
American    Association    for    Labor 
Legislation,     publications     of, 
278-279. 
active    in    compensation    move- 
ment, 223. 
health  insurance  plan,  223-224. 
Standards  for  Workmen's  Com- 
pensation Laws,  153,  238-249. 
American    Bar    Association,    imi- 
form  workmen's  compensation 
act  recommended  by,  153,  279. 
Andrews,  J.  B.,  72,  84,  225,  279. 
Application     of     laws,     depending 
upon    number     of     employees 
constitutional,  127. 
limited  laws,  134-135. 
general  laws,  134-136. 
precedents  for  passage  of  limited 

laws,  134-135. 
limitations  in  all  laws,  135-136. 
determination  of  application  of, 

187-188. 
all    laws    should   be   of   general 
application,  213-214. 
Arizona,    constitutional  provision, 
126. 
digest  of  compensation  law,  250. 
Assignment   of   compensation,   for- 
bidden, 151. 
Assiunption  of  risk,  defence  of,  12- 
13,  109. 
modification  of  rule,  79. 


291 


292 


INDEX 


Atlantic  City  conference  on  work- 
men's compensation,  106,  279. 

Attachment  of  compensation 
rights,  forbidden,  151. 

Attorneys,  regulation  of  charges 
of,  194-195. 

Austin,  C.  B.,  82,  278,  279. 

Average  weekly  wages,  compensa- 
tion based  on,  146. 

Beckwith,  O.  R.,  200,  279,  285. 

Benefit  associations,  effect  of  ac- 
ceptance of  benefits,  38-39,  95- 
96. 

Berry,  E.  S.,  20,  279,  285. 

Bismarck,  influence  in  forcing 
German  Social  Insurance  Sys- 
tem, 42,  44-47. 

Blackstone,  William,  20,  279, 

Blanchard,  R.  H.,  225,  279. 

Bradbury,  H.  B.,  201,  279. 

Brodsky,  K.  T.,  61,  279. 

Brooks^  J.  G.,  20,  46,  279,  286. 
investigation  in  Germany,  86. 
report  of,  61,  86. 

Bullock,  E.  D.,  178,  279. 

Business  of  Insurance,  publication 
edited  by  H.  P.  Dujiliam,  40, 
279. 

California,       constitutional       pro- 
vision, 126. 
law  may  now  cover  occupational 

diseases,  139. 
digest  of  compensation  law,  251. 

Casual  employment,  usually  ex- 
cepted from  operation  of  laws, 
137. 

Chicago  conference  on  workmen's 
compensation,  106,  280. 

Child  labour  legislation,  see  Women 
and  children. 

Children,  see  Women  and  children. 

Civil  rights,  enlargement  of,  6-7. 


Clark,  L.  D.,  20,  38,  84,  106,  280, 

286. 
Cliff,  V.  D.,  40,  280. 
Colorado,    digest   of    compensation 

law,  252. 
Commerce,  see  Interstate  and  for- 
eign commerce. 
Common   law   rights,   preserved  in 

some  cases,  139,  208. 
Common  law  system  of  employers' 
liability,  basis  of,   8-13. 
rules  of,  12. 
defences,  12-13. 
criticism  of,  13-19. 
statutory  changes  in,  63-84. 
Commons,  J.  R.,  72,  84,  225,  280. 
Commutation,  see  Lump  sum  pay- 
ments. 
Compensation  insurance,  157-179. 
forms  of,  158,  174. 
state  funds,  158,  174. 
mutual  associations,  158,  174. 
stock  companies,  158. 
self  insurance,  158. 
compulsion  to  insure,  161. 
different    from    liability    insur- 
ance, 161-162. 
approval  of  policy  forms,  164. 
requirements  in  New  York,  164- 

169. 
employer  must  bear  cost  of,  166. 
provisions  of  policy,   166-167. 
insurer  must  assume  entire  lia- 
bility, 167-168. 
necessity  of  reserves,  168. 
cancellation  of  policy,  169. 
supervision  of  rates,   173-174. 
Compensation    legislation    in    the 
United  States,  129-156. 
peculiar    to    this    country,    119, 

129,  131. 
in  general  harmony  with   other 

systems,  129-131. 
rapid  spread  of,  130-131. 


Il^DEX 


293 


adaptation  of  English  and  Ger- 
man  systems,   131-132. 
Compensation  movement,  a  world 
movement,  2. 

must   be   considered   in   its   his- 
torical aspect,  2. 
Compensation     system,     basis     of, 

3-4,  140. 
Compulsion  to  insure,  see  Compen- 
sation insurance. 
Compulsory  compensation   laws, 

held  unconstitutional,  104,  114- 
117. 

held      constitutional,      117-118, 
126-127. 

about  one- third  are,  133. 
Comiecticut,    digest    of    compensa- 
tion law,  252. 
Conservation,  essential  element  of 
compensation      system,       144, 
202-204. 

of    indemnity    payments,     145- 
146. 

forms  of,  official  and   unofficial, 
204. 

purpose  of,  204-205. 

official  efforts  for,  204-208. 

imofficial  efforts  for,  209-212. 
Constitution     of     United     States, 
state  compensation  laws  not  in 
conflict    with,    126-127. 
Constitutionality, 

of  labour  legislation,  64-66. 

of  workmen's  compensation  laws, 
107-128. 

practical    constitutional    consid- 
erations, 64-65,  86-88,  107. 

Maryland  law  of  1902  unconsti- 
tutional, 91. 

Montana  law  of  1909  unconstitu- 
tional, 102. 

technical    constitutional    consid- 
erations, 107-113. 

provisions  in  state  constitutions 


authorising   compensation    laws, 

126. 
of    social    insurance   legislation, 
222-223. 
Contributory     negligence,     defence 
of,  12-13,  110-111. 
modification  of  rule,  79. 
Corporate  organisation,  adapted  to 
necessities  of  industrial  life,  6. 
Cotton  gin,  invention  of,  5. 
Cowles,  W.  G.,  153,  178,  179,  280, 
285. 

Damages,  principles  of  at  common 
law,  15-16. 

Dawson,  M.  M.,  chairman  of  com- 
mittee which  drew  compensa- 
tion bill  in  New  York,  89. 
publications  of,  54,  61,  128,  178, 
278,  280,  285. 

Dawson,  W.  H.,  46,  51,  54,  61,  280. 

Day,  W.  A.,  225,  280. 

Delay,  not  permitted  in  compensa- 
tion proceedings,  192. 

Dependency,       determination      of, 
149,  197. 

Dependents,    kinds    of,    144,    148- 
149. 
payments  to,    149. 

Deprivation  of   property,   see  Due 
process  of  law. 

Digests  of  compensation  laws,  250- 
277. 

Disability,   kinds   of,   in  non-fatal 
cases,  144-145. 
disputes  regarding,  195-196. 

Diseases,  disability  resulting  from, 
188-189. 
see  also  Occupational  diseases. 

Dismemberments,    provisions    for, 
147-148. 

Domestic      service,      excepted      in 
nearly  all  law's,  136. 

Driggers/G.  H.,  156,  281. 


294 


INDEX 


Due  pi-ocess  of  law,  111-112,  com- 
pulsory laws  do  not  violate 
constitutional  guarantee  of, 
126-127. 

Duflfy,  T.  J.,  178,  278,  281. 

Dunham,  H.  P.,  see  Business  of 
insurance. 

Dunham,  S.  C,  40,  280,  281,  287. 


Eastman,  Crystal,  39,  40,  278,  281. 
Economics,   theory  of  in  England, 
7,  5.5-56. 
effect  of  theory,  7,  55-56. 
Elective  compensation  laws, 
principle  of,  118-120. 
held  constitutional,  120-123,  126. 
distinctive    national    type,     119, 

133. 
about  two-thirds  are,  133. 
devised    to    meet    constitutional 
objections  to  compulsory  laws, 
118-119. 
history  of  principle,  96,  119-120, 
133. 
Ely,  R.  T.,  20,  84,  278,  281. 
Employer  and  employee,  transition 
from   relation   of   master   and 
servant,   4-5. 
equal  before  the  law,  7,   11,  21- 
22. 
Employers'   liability,   see  Common 
law  system,  and  Compensation 
system. 
Employers'  liability  acts,  77. 
nature  of,  78-79. 
in  the  United  States,  79. 
Employers'  liability  insurance,  see 

Liability  insurance. 
England,  see  Great  Britain. 
Essentials  for  compensation  laws, 

140,  238-249. 
Europe,  background  of  workmen's 
compensation  in,  41-61. 


see  also  Germany,  and  Great 
Britain. 

Examination  of  injured  by  im- 
partial physician,  196. 

Exemptions  in  compensation  laws, 
135-137. 

Extra-territorial  effect  of  compen- 
sation laws,  151-153. 

Factory  inspection,  see  Labour  leg- 
islation, enforcement  of. 

Farm  labour,  see  Agricultural 
labour. 

Farnam,  H.  W.,  84,  278,  281. 

Fatal  cases,  see  Dependents,  and 
No  dependents. 

Faxon,  W.  C,  40,  281,  285. 

Federal  jurisdiction,  conflict  of 
compensation   laws  with,   137. 

Fellow-servant    rule,    12-13,    109- 
110. 
modification  of,  78. 
abrogation  of,  77-78. 

Fisher,  W.  C,  153,  281. 

Flynn,  B.  D.,  225,  281,  285. 

Foot,  Alfred,  40,  281. 

Ford,  John,  introduced  workmen's 
compensation  bill  in  New 
York   Senate,   89. 

Frankel,  L.  K.,  54,  61,  281. 

Franklin,  C.  H.,  40,  280,  281. 

Freund,  Ernest,  128,  278,  281. 

Friedensburg,   Ferdinand,   61,  281. 

Funeral  expenses,  payment  of, 
149. 

Germany,  basis  of  study  of  prob- 
lem, 2,  41. 

origin  of  social  insurance  sys- 
tem, 42,  47-48. 

legal  situation  in,  45. 

sickness  insurance  in,  46. 

sickness  insurance  system,  47- 
52. 


INDEX 


295 


accident    insurance    system,    48, 
53. 

old  age  and  invalidity  insurance, 
48. 

social   insurance   system,  47-53, 
220-221. 
Great   Britain,   basis   of   study   of 
problem,  2,  41. 

origin   of   compensation   system, 
54. 

labour  legislation  in,  55-56. 

repudiation     of     individualistic 
economic   theories,   44,    55-56. 

employers'  liability  act,  56. 

workmen's      compensation      act, 
56-57. 

application  of  act,  57-58. 

insurance  of  obligation,  58-60. 

administration  of  law,  60. 

adoption  of  social  insurance 
plans,  221-222. 
Gross  negligence  of  injured,  in- 
juries caused  by  exempt  from 
operation  of  law,  139,  191. 
Group  insurance,  see  Accident  in- 
surance and  Life  insurance. 

Handicraft  stage,  transition  from, 
4-6. 

Hard,  William,  20,  281. 

Hatch,  L.  W.,  20,  281,  285. 

Health,  see  Safety  and  health. 

Health  insurance,  see  Social  insur- 
ance. 

Henderson,  C.  R.,  20,  40,  281. 

Hendrick,  B.  J.,  156,  282. 

Hoflfman,  F.  L.,  40,  278,  282. 

Hotchkiss,  W.  H.,  178,  282. 

Illinois,  commission  of  1905,  94. 
report  of  commission,  94-97. 
proposed   bill   for   compensation 
by  voluntary  agreement,  95. 


proposed    social    insurance    bill, 

06-97. 
publications  of,  282. 
digest  of  compensation  law,  253. 
Indemnity  provisions,   140-153. 
payment  of  indemnity,  146. 
conservation   of  payments,    145- 

146. 
efforts  to  increase,  215-216. 
Indiana,    digest    of    compensation 

law,  254. 
Industrial  accidents,  causes  of,  21, 
25. 
effects  of,  21-23. 
problem  of,  25-26. 
provisions  against  effects  of,  26- 
39. 
Industrial   accident  insurance,   see 

Accident  insurance. 
Industrial  revolution,  4-7. 
Industrial  stage,  transition  to,  4-6. 
Insurance,      see     Accident     insur- 
ance. Compensation  insurance. 
Group  insurance,  Liability  in- 
surance.   Life    insurance,    and 
Social  insurance. 
Insurance   company,    party    in    in- 
terest   in    compensation    pro- 
ceedings, 191. 
duties  of,  191-192. 
Insurance  of  compensation  obliga- 
tion,    see     Compensation     in- 
surance. 
Interstate   and   foreign    commerce, 
usually  excepted  in  all   laws, 
137. 
Intoxication,    see   Serious   miscon- 
duct. 
Inventions,  causing  transition  from 
handicraft  stage  to  industrial 
stage,  5. 
Iowa,  compensation  law  held  con- 
stitutional, 127. 
digest  of  compensation  law,  255, 


S96 


INDEX 


Jones,  F.  R.,  153,  282. 
Jury,  see  Trial  by  jury. 

Kansas,    digest    of    compensation 
law,  256. 

Kent,  James,  20,  282. 

Kentucky,     law    held    unconstitu- 
tional,  124-125. 
digest  of  compensation  law,  256. 

Kingsbury,  S.  M.,  84,  282. 

Labour  legislation, 
volume  of,   65. 
classification   of,   67. 
enforcement  of,   80-82. 
effect  of,  82-83,  205-209. 
LaSalle,    Ferdinand,    influence    on 

German  thought,  44. 
Law,  F.  E.,  178,  282. 
Lewis,  F.  W.,  40,  282. 
Lewis,  W.  D.,  128,  282. 
Liability  insurance, 
inception  of,  27-28. 
purpose  of,  28-30. 
effects  of,  29-30,   lGl-163. 
prevalent     before     adoption     of 
compensation  system,  28,   160. 
different  from  compensation  in- 
surance,  101. 
limitation  of  liability,  167. 
schedule  rating,  212. 
Liability     Insurance     Association, 

publications  of,  178,  282. 
Life  insurance,  on  group  plan,  218- 

219. 
Limited   laws,    see   Application   of 

laws. 
Litigation,  under  common  law  sys- 
tem,  11-17. 
elimination   of  imder  compensa- 
tion, 180-181,  199-200. 
Lloyd  George,  David,  221. 
Lott,  E.  S.,  178,  283. 


Louisiana,  digest  of  compensation 

law,  257. 
Low,  A.  M.,  56,  283,  286. 
Lump  sum  payments,  not  favoured 

but  permitted,  150,  198. 
Lyman,  T.  U.,  200,  283. 


McKitrick,  Reuben,  40,  283. 

McVey,  F.  L.,  20,  283. 

Maine,  digest  of  compensation  law, 

258. 
Malingering,    prevention    of,    142, 

195-196. 
Marx,   Karl,   influence  on   German 

thought,  44. 
Maryland,     compensation     law     of 
1902,  89. 
scope  of,   89-91. 
declared     unconstitutional,     91, 

113-114. 
law  of  1910,  102. 
digest  of  compensation  law,  259. 
Massachusetts,     investigation     re- 
garding   workingmen's    insur- 
ance, 86. 
investigation  of  1903,  91-92. 
proposed  bill  of  1904,  92-94. 
law   substituting   agreement   for 
compensation  for  common  law 
liability,    99-101. 
compensation  law  held  constitu- 
tional,  120-122. 
law  covers  occupational  diseases, 

138. 
publications  of,  154,  283. 
digest  of  compensation  law,  260. 
Master  and  servant,  transition  of 
relation  to  employer  and  em- 
ployee, law  of,  4-5. 
Maternity   benefits,   see   Social   in- 
surance. 
Medical  aid,  see  Statutory  Medical 
aid. 


i:ndex 


297 


Medical  testimony,  importance  of, 
provisions  for,    195-196. 

Merrels,  F.  B.,  200,  283,  285. 

Michigan,   law  does  not  cover  oc- 
cupational  diseases,    138. 
publications  of,  283. 
digest  of  compensation  law,  261. 

Minnesota,  digest  of  compensation 
law,  261. 

Misconduct,    see    Serious    miscon- 
duct. 

Mitchell,  John,  201,  278,  283. 

Montana,     compensation     law     of 
1909,   101-102. 
law   held   unconstitutional,    102, 

114-116. 
digest  of  compensation  law,  262. 

Mule,  spinning,   invention  of,  5. 

Mutual  associations,  see  Compensa- 
tion insurance. 


National  Association  of  Industrial 
Accident  Boards,  proceedings 
of,  201,  283. 

Nebraska,  digest  of  compensation 
law,   263. 

Negligence,  see  Contributory  negli- 
gence,   and    Gross    negligence. 

Nevada,  digest  of  compensation 
law,  264. 

New  Hampshire,  comment  on  com- 
pensation law,   131. 
digest     of     compensation     law, 
265. 

New   Jersey,    first   state   to   adopt 
comprehensive      compensation 
law,   1. 
digest  of  compensation  law,  265. 

New    York,    compensation    bill    of 
1898,  89. 
investigation  of  1909,  102-103. 
compulsory  compensation  law  of 
1910,    103-104. 


law  declared  unconstitutional, 
104,   116-117. 

voluntary  compensation  law  of 
1910,   105-106. 

constitutional  provision,  126. 

provision  held  constitutional  by 
Supreme  Court  of  United 
States,  126-127. 

administration  of  law,   185-187. 

insurance  under  law,  164-169. 

outline  of  compensation  move- 
ment in,  226-237. 

publications  of,   155,  284. 

digest  of  compensation  law,  266. 
No   dependents,   payments   usually 
limited    to    funeral    expenses, 
149-150. 
Non-occupational  accidents,  insur- 
ance to  cover,  217. 

Occupational   diseases,   application 
of  compensation  laws  to,  137- 
139. 
covered  in  Massachusetts,  138. 
not  covered  in  Michigan,  138. 
probably   covered   in   California, 

139. 
probably  will  be  covered,  216. 
Ogg,  F.  A.,  20,  225,  284. 
Ohio,  constitutional  provision,  126. 
publications  of,  155,  284. 
digest  of  compensation  law,  267. 
Ohio   State    Insurance   Law,    com- 
ments on,  155,  284. 
Oklahoma,  constitutional  provision, 
126. 
digest  of  compensation  law,  267. 
Old  age  pension  systems, 
in  Germany,  47-48. 
in  Great  Britain,  221. 
Operation  of  laws, 

casual     employments     excepted, 

137. 
injuries  caused  by  gross  or  wil- 


298 


INDEX 


ful   negligence   excepted,    139, 
191. 
Oregon,     digest     of     compensation 
law,   268. 

Packer,  Launcelot,  62.  284. 

Page,  B.  A.,  40,  284,  285. 

Parkinson,  T.  I.,  106,  279,  284. 

Partial  dependency,  see  Depend- 
ents. 

Partial    disability,    see    Disability. 

Parties  in  interest  in  compensation 
proceedings,  191-192. 

Patterson,  J.  V.,  156,  284. 

Payment  of  indemnity,  see  Indem- 
nity provisions,  also  Lump 
sum  payments. 

Pennsylvania,    constitutional    pro- 
vision,   126. 
digest  of  compensation  law,  269. 

Pension  systems,  see  Old  age  pen- 
sion systems. 

Physicians   and    surgeons,    regula- 
tion of  charges  of,  194. 
See  also  Medical  testimony. 

Political  tendencies,  enlargement  of 
political  rights,  6-7. 

Power  loom,  invention  of,  5. 

Pre-existing  bodily  defects,  effect 
of,   196. 

Principles  which  should  be  ob- 
served in  compensation  legisla- 
tion,   140,   238-249. 

Railroad  operations,  in  relation  to 
fellow-servant  rule,  77-78. 

Randolph,  C.  F.,  128,  284,  286. 

Reserves,  see  Compensation  insur- 
ance. 

Rhode  Island,  digest  of  compensa- 
tion law,  270. 

Rhodes,  J.  E.,  2d.,  40,  284,  285. 

Roosevelt,  Theodore,  in  favour  of 
compensation  system,  96-97. 


recommendations  in  messages  to 

Congress,  97-98, 
Rowe,  J.  S.,  178,  282. 
Rubinow,   I.   M.,    20,   39,   61,    153, 

224,  225,  284. 

Safety  and  health,  laws  relating  to, 
67-68,  200-207. 
effect  of  violation  of,  74-75,  80. 
Safety  first  movement,  212-213. 
Safety    organisations,    210-212. 
of  employers,   210. 
of  insurance  companies,  211-212. 
Schedule    rating,    in    liability    in- 
surance, 212. 
Scott,  Laura,  73,  278,  284. 
Seager,  H.  R.,  39,  224,  284. 
Security  of  payments,  157-179. 
under   common   law   system,    16, 

157. 
essential    element   of    compensa- 
tion system,  157-158. 
Self    insurance,    see   Compensation 

insurance. 
Serious  misconduct,  accidents  aris- 
ing from  not  covered,  191. 
Sherman,  P.  T.,  61,  178,  179,  279, 

282,  284. 
Sickness  insurance,   see   Social  in- 
surance. 
Social  aspects  of  workmen's  com- 
pensation,  202-225. 
Social  insurance,  meaning  and  sig- 
nificance of,  220. 
forms  of,  220. 
health     or     sickness     insurance, 

220. 
maternity    benefits,    220. 
old  age  pensions,  220. 
unemployment  insurance,  220. 
in  Germany,  47-53,  220-221. 
in  Great  Britain,  221-222. 
constitutional  difficulties  in  the 
United  States,  222. 


IKDEX 


299 


health  insurance  plan  suggested 
by  the  American  Association 
for  Labor  Legislation,  223- 
224. 

Spinning  jenny,  invention  of,  5. 

Standards  for  workmen's  compen- 
sation legislation,  suggested 
by  American  Association  for 
Labor  Legislation,  153,  238- 
249,  278. 

State  constitutions,  provisions  au- 
thorising compensation  laws, 
126. 

State  funds,  see  Compensation  in- 
surance. 

Statutory  medical   aid,   provisions 
regarding,    143-144,    193-194, 
extension  of,  143,  215. 

Stimson,  F.  J.,  24,  285. 

Stock  companies,  see  Compensation 
insurance. 

Stone,  J.  T.,  178,  283,  285. 

Subrogation,  permitted  against 
party  responsible  for  injuries, 
151. 

Summary  proceedings,  in  compen- 
sation administration,  192- 
193. 

Supreme  Court  of  the  United 
States,  decisions  in  compensa- 
tion cases,  126-127. 

Surgeons,  see  Physicians  and  sur- 
geons. 

Surgical  aid,  see  Statutory  medical 
aid. 


Third  parties,  rights  against,  150- 
151. 

Tolman,  W.  H.,  224,  285. 

Total  dependency,  see  Dependents. 

Total  disability,  see  Disability. 

Transition  from  common  law  sys- 
tem to  compensation  system, 
rapid,  1-2,  130. 

Transition  from  handicraft  stage 
to  industrial  stage,  effect  of, 
5. 

Trial  by  jury,  element  of  common 
law  system,  15-16,  111-112. 

Unemployment  insurance,  see  So- 
cial insurance. 
Uniformity  in  compensation  legis- 
lation, reasons  for  lack  of, 
88-89. 
United  States,  rapidity  of  spread 
of  compensation  legislation  in, 
2,  130. 

Act  of  May  30,  1908,  1,  85,  99. 

amendments  to  act,  98. 

administration  of  act,  1,  99. 

legislation  peculiar  to  this  coun- 
try,  129. 

extent  of  legislation,  130. 

legislation  adapted  from  English 
and  German  laws,  132. 

publications  of,  285-287. 

digest   of    compensation    law   of 
1916,  277. 

See  also  Constitution  of  United 
States. 


Texas,  digest  of  compensation  law, 
271. 

Textile  industries,  transition  from 
handicraft  state  to  industrial 
stage  centred  aroimd,  4. 

The  Insurance  Institute  of  Hart- 
ford, publications  of,  285. 


Vermont,  constitutional  provision, 

126. 
digest     of     compensation     law, 

272. 
Verrill,  C.  H.,  61,  286,  287. 
Villard,  H.  G.,  62,  287. 
Volimtary  compensation  laws,  see 

Elective  compensation  laws. 


300 


INDEX 


Waiting  period,  provisions  regard- 
ing, 141-143. 
eflForts  to  reduce,  215. 

Waiver  of  compensation  riglits  for- 
bidden, 151. 

Washington,    state    insurance   law 
lield    constitutional    by    state 
court,  117-118. 
by  Supreme  Court  of  the  United 

States,  127. 
publications  of,  155-156,  287. 
digest  of  compensation  law,  272. 

West  Virginia,  digest  of  compensa- 
tion law,  273. 

Wilful  negligence,  see  Gross  negli- 
gence. 

William  I,  Emperor  of  Germany, 
connection  with  German  sys- 
tem, 47. 

Williams,  L.  C,  128,  287. 

Willoughby,  W.  F.,  book  on  Work- 
ingmen's  Insurance,  86,  287. 

Wisconsin,    suggestions    of    substi- 


tute for  common  law  system, 
96. 
law  held  constitutional,  122-123. 
publications  of,  287. 
digest  of  compensation  law,  274, 
Wolfe,  S.  H.,  178,  282,  285,  287. 
Women  and  children,  laws  relating 
to  employment  of,  72-73,  207- 
208. 
effect  of  violation  of,  76,  208. 
Workman,  effect  of  industrial  rev- 
olution upon,  6. 
Workmen's    collective    policy,    see 

Accident   insurance. 
Wright,     Carroll     D.,     connection 
with    inception    of    compensa- 
tion movement,  86,  91. 
Wyoming,  constitutional  provision, 
126. 
digest  of  compensation  law,  275. 

Yale  Insurance  Lectures,  287. 
Yaple,  W.  D.,  201,  279,  287. 


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"It  is  a  book  that  we  should  be  sorry  to  miss." — Argonaut,  San 
Francisco. 

"The  present  work  covers  with  notable  fullness  and  completeness 
of  information  the  history  of  labor  organization  in  this  country  and 
the  questions  in  dispute  between  labor  and  capital.  The  book  is  em- 
phatically one  to  be  in  the  newspaper  library,  in  the  public  library, 
and  in  many  private  libraries." — The  Independent. 

"The  book  is  a  highly  creditable  performance  and  ought  to  have 
a  wide  welcome."— Ca/.  Outlook. 

"A  very  complete  exposition  of  the  organized  labor  movement. 
Throughout,  he  is  fair  minded  as  well  as  learned." — The  Public, 
Chicago. 

"A  valuable  contribution  that  should  do  much  to  make  the  em- 
ployes' attitude  comprehensible  to  employers  and  the  latter's  ap- 
proach clearer  to  the  worker." — Am.  Acad,  of  Political  and  Social 
Science. 


THE  MACMILLAN  COMPANY 

Publishers      64-66  Fifth  Avenue      New  York 


Labor  and  Administration 


By  JOHN  R.  COMMONS 
Professor  of  Political  Economy  in  the  University  of  Wisconsin 

Cloth,  i2mo,  $i.6o 

"Straightforward  and  fearless  examinations  of  fact." — Boston 
Evening  Transcript. 

"There  is  not  a  chapter  which  does  not  contain  information  which 
is  practical  and  timely." — San  Francisco  Chronicle. 

"Each  chapter  is  a  book  in  itself  worthy  of  careful  perusal.  .  .  . 
Written  in  his  unusual  vivid  and  interesting  style." — Post  Dispatch, 
St.  Louis. 

"No  person  interested  in  economic  or  in  labor  history  can  afford 
to  be  without  this  volume." — Amer.  Acad.  Polit.  and  Social  Science. 

"Full  of  vitality  and  optimism.  Writes  with  the  experience  of  one 
who  has  himself  taken  a  leading  part  in  the  scientific  investigation 
of  social  conditions ;  but,  even  in  the  midst  of  details,  he  never  loses 
sight  of  the  democratic  ideal." — Economic  Review,  London. 

"Few  books  on  labor  that  have  appeared  lately  are  so  fertile  with 
ideas  as  this." — Indianapolis  News. 


THE  MACMILLAN  COMPANY 

Publishers      64-66  Fifth  Avenue      New  York 


This  book  is  DUE  on  the  last  date  stamped  below 


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